All new claimants of Jobseeker's Allowance would have to sit a skills test to measure literacy, numeracy and IT ability within six weeks of signing on.
Those found to need improvement will be put on a programme of training aimed at getting them up to the standard required for steady employment.
Labour say around 300,000 people a year will be subject to the conditions of their basic skills policy, which will be set out by shadow work and pensions secretary Rachel Reeves.
Ms Reeves will say: "We all know that basic skills are essential in today's jobs market, but the shocking levels of English and maths among too many jobseekers are holding them back from getting work. This traps too many jobseekers in a vicious cycle between low paid work and benefits."
Labour leader Ed Miliband said it was wrong to "demonise" people on benefits but there was a minority of people who could work, but were not doing so.
He said: "There is an issue about a minority of people who could work, but aren't doing so. That's why Labour has clear plans to say to every young person who has been unemployed for more than a year that they need to go back into work, and we'll make sure they get a job, and every older person unemployed for more than two years."