Black and Hispanic children have made substantial gains in their ability to read in the past four years, but they still lag dramatically behind white children, according to a report released yesterday.

The survey tested reading skills at five levels: rudimentary, basic, intermediary, adept and advanced. It was compiled from surveys of more than a quarter of a million students in age groups 9, 13 and 17.

Overall, the report found that American children were reading better than they did when the study started in 1971, with 17-year-olds continuing to improve over the past four years. But it also painted starkly different portraits of American education for whites and minorities, underscoring the wide and persistent gap between the two groups.

The report, by the federally financed National Assessment of Education Progress, said that between 1971 and 1984, black 9-year-olds gained in basic skills; those who failed to read at a rudimentary level dropped from 30 percent to 16 percent. Black 17-year-olds with adept reading skills climbed from 7 percent to 16 percent.

Generally, the report showed that although schools had done a good job at giving the most basic reading skills to a wider range of American children, they had not done as well at the more advanced levels.

For example, although virtually all 17-year-olds and 13-year-olds have reached at least basic reading levels, fewer than 5 percent of the 17-year-olds and only 0.3 percent of 13-year-olds reached the advanced level.

The survey found significant progress in blacks' education since the reading assessment began. But other findings illustrate pressing problems in minority education. For example, 45 percent of white children were adept at reading at age 17 -- almost three times the number for blacks the same age.

Furthermore, the survey found that 80 percent of Hispanic and 84 percent of black 17-year-olds did not read well enough to do college work. That dramatic finding comes amid declining minority college enrollment and retention rates, with many universities blaming the elementary and secondary schools for not preparing minorities.

"The overall success story for minority students cannot be disputed," said Archie Lapointe, executive director of the association. "But the gap remains dramatic and there is no basis in these findings for relaxing efforts to make equal educational opportunity a reality."

Education Secretary William J. Bennett said the report represented "good news and bad news."

"We are on our way to becoming a nation of readers," Bennett told a news conference at the National Press Club here, where the report was released. But he added, "We are not there yet."

The report also showed that students from the Southeast had pulled virtually even with the rest of the nation in their reading prowess. The South, traditionally the region where illiteracy is most prevalent, has lately been on the forefront of the education reform effort, and the efforts may already have paid off.

Another finding was that 27 percent of the 9-year-olds watch more than six hours of television daily, up from 18 percent who watched that much in 1980.

Children who watched that much television generally scored lower, the study said, although a little television -- two hours each day -- seemed to help reading ability.