Analysis of the requirements for diagnostic testing of the early stages of reading competence shows that diagnostic testing needs to focus on decoding, word knowledge, and sentence processing. Reading diagnostic tests also need to assess "entry" skills for the assignment of pupils to instruction, and "exit" skills at each grade level. The 21 benchmark skills for reading diagnosis that have been identified include reading comprehension, which is conceived as being measured through cloze procedures. Arranging these skills by grade level exhibits their cumulative nature, showing how more complex skills are built from simpler ones. Diagnosis of reading skill deficiencies can be accomplished by assessing the enabling skills in sequence, beginning with the more comprehensive and proceeding to the simpler skills. (Author/RL)