The New York City graduation rate reached a milestone in 2006, 50%, according to numbers released by the state education commissioner yesterday.

Commissioner Richard Mills praised the city’s incremental progress — about 3 percentage points a year for the past three years — compared with other large cities in the state, where rates even declined in some cases.

“I think New York City is a very positive story,” he said. “There’s just a very determined effort.”

Still, even as graduation rates were going up, the rate of New York City students who dropped out before completing four years increased between 2005 and 2006 by 5 percentage points, to 20% from 15%.

With half of New York City students and a third of students statewide not graduating within four years, Mr. Mills chided school districts to quicken the pace of education reform.

“It’s a step in the right direction, but it’s too low and it’s too slow,” Mr. Mills said. “There’s trouble ahead in these numbers.”

While the statewide percentage of black and Hispanic students graduating in 2006 went up, it has yet to reach 50%.

Mayor Bloomberg, who has sought to be the education mayor, said he was “thrilled” at the news of the upward trends.

“I do believe that we’re going in the right direction,” he said.

The chairman of the City Council’s Education Committee, Robert Jackson, who is holding a hearing today to examine the dropout rate, said he would reserve his applause until the graduation rate tops 80%.

“Are we proud?” he said. “Absolutely not.”

Chancellor Joel Klein touted the city’s progress, but acknowledged that the rate is still very low.

“I’d be the first to say that we have a lot more work to do,” he said. “But 50% is a lot better than 44%.”