According to a recent study by the Centre for Analysis of Social Exclusion (CASE) at the London School of Economics, poverty and social exclusion have been taken very seriously by this Government, resulting in high-profile targets, new policies and funding streams. Social exclusion was recognised to consist of multi-faceted and interlinked problems, with the cycle of disadvantage more clearly understood than ever before. Tackling educational standards, and literacy in particular, was an important dimension to the strategy to address social exclusion. This paper is for those concerned with the relationship between poor literacy skills and social exclusion, including policymakers, education professionals and service providers. It includes the evidence after two years of a three-year Basic Skills Agency National Support Project delivered by the National Literacy Trust, and follows an earlier discussion paper, "Literacy and Social Inclusion: the Policy Challenge". The purpose of this paper is to review the evidence gathered and to provide a resource for those concerned with issues in this field. The evidence was developed from a dialogue with literacy practitioners working with those who were already--or were at risk of becoming--socially excluded because of their poor literacy, and also with those professionals across a range of policy areas who saw poor literacy skills as a significant factor in their own service delivery. Published research findings and official reports were also included in the evidence base. The focus of the paper is on home and community literacy, rather than classroom practice, with five key areas: (1) Promoting early language and reading skills; (2) Building parents' skills; (3) Out-of-school-hours literacy support; (4) Motivating disaffected young people; and (5) Improving the skills of adults at risk. Appended are: (1) Background to the project; and (2) Use of services by disadvantaged people. (Contains 156 footnotes.)