More than one in four 11-year-olds had below expected reading levels before Covid, sparking fears the figures are "the tip of the iceberg".
The latest available data from the Department for Education shows 27% of children - or 173,765 pupils - had a reading ability below their expected ability at the end of Key Stage 2 in 2019.
The number of youngsters struggling at the end of primary school had increased, compared to 25% - or 154,169 pupils - the previous year.
Official figures, revealed by Schools Minister Robin Walker in a written parliamentary question, show the figure rose to above 40% in some constituencies such as Leeds Central, Peterborough and Dudley North.
Mr Walker said no data was recorded "for academic years 2019/20 or 2020/21 due to the impact of the COVID-19 outbreak".
The Liberal Democrats said the data laid bare the "reading crisis" in schools - and warned it could be the "tip of the iceberg" after children suffered major disruption to their schooling during the pandemic.
MPs warned last week that poorer pupils could be up to eight months behind at school after the pandemic and the Government's catch-up plans are failing to reach them.
The Commons Education Committee said repeated school closures had a "disastrous impact" on children's education, with disadvantaged kids worst hit by months out of the classroom.
Lib Dem education spokesperson Munira Wilson said: "These figures reveal a reading crisis in our schools and they’re just the tip of the iceberg.
"The pandemic has had a huge effect on our children, and with reading ages already below standards for many before the crisis, the case now could be terrible for thousands of children across the country.
“Parents, teachers and pupils have not had a fair deal throughout this pandemic, no child should leave primary school unable to read at the standard level for their age - they need a chance to catch up."
The party called for an urgent review into reading standards across the country and for ministers to pump more cash into catch-up programmes.
The Government has announced £5 billion in funding to help children catch up on lost learning over the pandemic - which has been criticised for falling short of the £15 billion demanded by Boris Johnson's education recovery tsar Sir Kevan Collins.
A Department for Education spokesperson said: "We are committed to raising literacy standards and our ambitious recovery plan is helping pupils make up for learning lost during the pandemic.
"Backed by £5 billion, we are rolling out high-quality tutoring – which has seen a million courses started by pupils so far – alongside world class training for teachers and early years practitioners, and additional funding for schools."
