she needs to pass a life in the uk test and must obtain a b1 qualification for the english test in order for her to meet the requirement for indefinite leave to remain.

https://www.gov.uk/government/upload...otes_04-14.pdf

that is on the page 2 of the guidance note for set m.

the rules was changed last year from choosing either life in the uk or english test to both needs to be obtain. so i believe that she needs to do both.