Speaking at the TESNUT Progress in Partnership conference in London, Education Secretary David Blunkett launched a range of measures to combat truancy and exclusion from school.
He also announced a #163;2 million programme to promote work-related learning for 14 to 16-year-old pupils.
"I believe education lies at the heart of our programme to combat social exclusion," said Mr Blunkett. "Education is crucial to equity, to justice and fairness, as well as to the development of potential."
A recent Audit Commission report, he said, shows that two-thirds of convicted school-age offenders had been excluded from school or were persistent truants.
Urging schools to find new, appropriate ways of helping individuals, he spoke about the dramatic change in his own son once his dyslexia had been recognised and dealt with. "Disaffection from schools costs us dear," he said. "The cost to the taxpayer of dealing with the consequences of failure is enormous compared to the cost of investment in preventing exclusion and truancy.
"We must work to ensure that young people do not get turned off by school."
He reiterated the Government's view that schools cannot be blamed for all society's ills.
"It is not the job of schools to be social workers, psychologists or probation officers - schools are there to teach. Clearly, however, schools have a key part in the identification of problems which impact both inside and outside their walls."
Schools and local authorities will be expected to bid for the new projects which come under the remit of the new Social Exclusion Unit, chaired by the Prime Minister.