Australia is facing a crisis of computer literacy after the latest national IT tests showed a sharp drop in results among school students.

NSW students were among the worst performers in the country, falling behind Victoria, South Australia and the ACT, according to the report released by the Australian Curriculum, Assessment and Reporting Authority on Tuesday.

The NAP-ICT tests, which have been taken by more than 10,000 students every three years since 2005, ask students to perform basic practical tasks such as "creating a new email folder on a webmail account" or open "a hyperlink in a separate tab."