Education Minister Jan Björklund said that lowering the age at which Swedish kids get graded for the first time would set students on the right track from earlier in their schooling.
"This gives an increased focus on results in school work which is important," he told the TT news agency.
"There are several advantages when it comes to grading. It offers clear information to the parents about how students are doing."
The minister stressed that Sweden needs to improve its teaching approach to improve pupils' knowledge early. The news comes soon after Sweden was slammed in December's Pisa rankings when it dropped below the OECD average in maths, reading comprehension, and natural sciences.
Currently, Swedish students start getting graded in the sixth grade when the children are aged 12 to 13.
Compared to the other 33 OECD countries, Sweden is third from the bottom when it comes to the age students are first graded. Northern Ireland, the UK, and New Zealand are at the top of the list with pupils there getting graded from the ages of four and five. The US joins the majority of countries on the list with grades from six years old and upwards.
Prime Minister Fredrik Reinfeldt acknowledged that the old method of allowing the years to pass before grading "has not worked very well".
The proposal suggested that the results would be sent home to the parents rather than being given out in school, as is the system today.
"Students standing around in class and comparing their scores isn't desirable," Björklund explained.
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The proposal also said that the failing "F" grade would be reformulated to say that the student has "not yet passed".
While the proposal could become a reality as early as autumn, Monday's reform would be introduced in 2017.
The news comes just days after Björklund announced that Sweden will inject 1.7 billion kronor ($250 million) into improving Swedish language courses for school students who have immigrant parents or who came to Sweden after schooling began. Students with Swedish parents pass school at a rate of 91 percent compared to 52 percent for children with immigrant parents.