Ms Kelly told local government leaders yesterday that she intended to end their dominance of state education by inviting other groups to open and run schools. A White Paper this autumn will include radical proposals to replace failing schools with ones run by parents, companies or charities.

Ms Kelly also made clear that 1,000 schools considered to be “coasting” would face pressure to respond to demands for better standards.

Her proposals indicated an important extension of private sector involvement in state education, despite growing hostility from teachers’ unions towards plans to open 200 academies by 2010. Academies are sponsored and controlled by businesses and other private organisations, but funded by the Government.

Ms Kelly told a Local Government Association conference in London that she planned to expand parental choice. “We need to harness all the energy and skill we can in the provision of state education so that we can raise standards for every pupil,” she said.

“I am interested in seeing how we can work with a variety of potential not-for-profit organisations — educational charities, faith and parents’ groups, perhaps mutual organisations — in order to drive the next phase of reform.”

The role of councils would be as “the commissioner rather than the provider” of education, supporting parents in relations with schools.

“Councils don’t add value through micro-managing heads, employing the teachers or owning the bricks and the land that schools sit on,” she said. “But they can add significant value through the new commissioning role. This will see councils with a single-minded focus on listening and responding to the views of parents and pupils.”

The proposals are in line with Labour’s manifesto, which promised parents more power. It said: “Where new educational providers can help boost standards and opportunities in a locality, we will welcome them subject to parental demand, fair funding and fair admissions.”

Ms Kelly said that coasting schools were doing too little to improve. She confirmed that she would halve the time for failing schools to improve to 12 months. Those judged to have made inadequate progress would be closed or replaced.

“We cannot ask children to be patient while their school gets a second, third or fourth chance to improve,” she said.

Ms Kelly’s radical proposals indicate Tony Blair’s determination to accelerate the pace of education reform in his final term and could end 60 years of local government control of education, which has seen the growth of town hall empires resistant to reform.

The aim is to transfer power from bureaucrats to parents, to force schools to respond more rapidly, and to overturn the Labour orthodoxy that councils should control education.

David Bell, the head of Ofsted, backed the plan. But unions accused Ms Kelly of seeking to speed up school closures to meet the target for opening academies. Steve Sinnott, the general secretary of the National Union of Teachers, said: “The suspicion remains that there is a secret agenda to achieve the Government’s target on academies.”

Mick Brookes, the general secretary of the National Association of Head Teachers, said that it would be impossible for most failing schools to be transformed in one year.

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