Skill learning from language instructions is a critical challenge in developing intelligent agents that can generalize across diverse tasks and follow complex human instructions. Hierarchical methods address this by decomposing the learning problem into multiple levels, where the high-level and low-level policies are mediated through a latent plan space. Effective modeling and learning of this latent plan space are key to enabling robust and interpretable skill learning. In this paper, we introduce LADS, a hierarchical approach that learns language-conditioned discrete latent plans through semantic skill abstractions. Our method decouples the learning of the latent plan space from the language-conditioned high-level policy to improve training stability. First, we incorporate a trajectory encoder to learn a discrete latent space with the low-level policy, regularized by language instructions. Next, we model the high-level policy as a categorical distribution over these discrete latent plans to capture the multi-modality of the dataset. Through experiments in simulated control environments, we demonstrate that LADS outperforms state-of-the-art methods in both skill learning and compositional generalization.