Scotland also fell, from 14th to 26th. Russia, which matched it last time, was top of the overall achievement table.
Analysis of the England results said children were spending more time on computers and reading less for fun.
Pirls is designed to investigate children's "reading literacy" and associated factors after, in most countries, four years of formal schooling - five in some, including England and Scotland.
First run in 2001, it involves data from a sample of pupils, their parents and their teachers and head teachers.
Education ministers have repeatedly held up England's high performance in 2001 as being a credit to the country's education system.
After seeing the 2006 results the Children, Schools and Families Secretary, Ed Balls, said parents must do more.
