University students must have their English language skills tested and meet Common European Framework of Reference for Languages (CEFR) standards before they can graduate, said the government.
Each university can design its own tests, but the assessment must comply with CEFR standards, said government spokesman Chai Wacharonke.
CEFR is an international standard for language proficiency on a six-point scale, from A1 for beginners up to C2 for those who have mastered a language.
Mr Chai said that to pass the compulsory test, those pursuing a diploma must achieve at least a B1 level, while bachelor's degree students must have a minimum B2 level and postgraduate students at least a C1 status.
Prime Minister Srettha Thavisin ordered the tests to start on Nov 28.
Fluency in the English language would benefit tourism, trade, investment and research, Mr Chai said.
The English test in universities is being launched after Mr Srettha was taken aback by the results of the latest Organisation for Economic Co-operation and Development's Pisa test, which saw Thai students' scores hit 20-year lows. The result was reported last month.
Mr Srettha said last month that many people had criticised Thai education for its poor quality, but no one has taken serious action to fix it.