The report, conducted by consultancy firm Booz & Company, defines basic skills as using a search engine, sending and receiving emails, completing online applications and accessing information online.
Go ON UK, a charity chaired by the UK digital champion Martha Lane Fox, commissioned the report.
The organisation aims to do more to improve digital literacy in the UK.
It will start by looking at how to improve skills in the workplace.
"We need to make the country fit for purpose through the next decade and ensure everyone and every organisation has basic digital literacy," said Ms Lane Fox.
The charity has worked with organisations including Age UK, the BBC, the Big Lottery Fund, EE, E.ON, Lloyds Banking Group, the Post Office and TalkTalk, and each has pledged to train its employees in the four basic skills identified by the report.
The report estimates that only one third of small and medium-sized companies in the UK have a digital presence and only 14% sell their products and services online, missing out on the potential for billions of pounds more revenue.
"If the UK can supercharge itself, it could add a lot of value," said Ms Lane Fox.
Low bar
"This is not just about getting more people online, but about building the skills of those who are online," she said.
Annika Small, chief executive of the Nominet Trust, a charity set up to find ways of using the internet for social good, welcomed the plan.
"It is shocking that 16 million people don't have basic skills and there is a lot of work going on to encourage people to use the internet," she said.
But, she added, the skills identified by the report "seem to set the bar quite low".
"Once people have found something relevant to them online and have discovered the power of the internet, their skills become quite sophisticated," she said.
Digital divide
According to the latest figures from the Office of National Statistics, 7.82 million adults (16%) in the UK have never used the internet. That is 10% lower than in 2011.
The numbers of those disengaged from technology have always troubled the government, especially as those disconnected tend to be from the poorest families.
To help tackle the problem, Ms Lane Fox was appointed as the UK's first digital champion in 2009.
She set up Race Online and initially pledged to get the poorest four million Britons online by the time of the London Olympics, but later the charity changed its focus to concentrate on making the UK "the world's first networked nation".
Ms Lane Fox said that she had mixed feelings about the Race Online's record.
"Of course the number should be smaller and we should have got there more quickly," she said.
But she said it had put the issue on the agenda and enabled some big changes, such as bringing all the governments websites together at gov.uk.
"That has a big role to play in enabling people to use services online," said Ms Lane Fox