"Failing" schools should be eradicated in Wales by next September, according to a radical blueprint for improvement commissioned by the Assembly government.
Educational standards could enter a "downward spiral" unless urgent action is taken to drive up performance, according to the so-called "task and finish group" set up by education minister Leighton Andrews.
Sweeping changes to the system are needed to move more money to the front line, its report recommends.
As a minimum standard, no school in Wales should be rated unsatisfactory following an Estyn inspection after September 2012, it says. By 2015, the report calls for all schools to be rated better than adequate, which it describes as a "significant challenge for the benefit of all learners".
Estyn chief inspector Ann Keane recently said that a third of schools had underperformed over the last six years, and only 8 per cent had outstanding features.
The task and finish group has made 33 recommendations in a detailed report, which it says should be picked up by the next government as soon as possible after May's Assembly elections.
Chair Vivian Thomas, a former headteacher and director of education for Neath Port Talbot, said: "Accountability for educational performance has become confused and over-complex in Wales, and thus weak . greater transparency and responsibility around educational outcomes is a vital reform objective."
His report said there needs to be a "firm acceptance" by parents, schools, politicians and pupils that "we should, and can, do better".
But it also acknowledges that teachers have faced "uncertainty" in the number of initiatives they have had to consider, and says they need time to teach without distraction.
ATL Cymru director Philip Dixon said the Estyn inspection targets were "very ambitious" and that schools would need strong support to achieve them.
NASUWT Wales organiser Rex Phillips said the targets were "wholly unrealistic" and accused the report of going beyond its original remit. "It seems to me the group has tried to ingratiate itself with the minister and Estyn by echoing their rhetoric from the last couple of months," he said.
But Ms Keane said schools could achieve the target. "I am pleased to see that it reinforces many of the points I made in my recent annual report and that it sets out a series of worthwhile challenges for the education system in Wales," she said.
"The targets that the report sets for school inspection outcomes are ambitious but achievable if everyone in the system is committed to identifying and addressing how they can improve on what they do now."
Elsewhere, the report is highly critical of the performance of Wales's 22 local authorities, saying some lack the capacity to properly challenge and support the performance of their schools.
While some local authorities are making difficult decisions over surplus places and collaboration, it says others are "continually discussing these issues with no realistic outcome in sight".
As revealed by TES Cymru last month, the report recommends that the work of local authorities should be joined together in regional consortiums to drive improvement and deliver savings.
From this September, each consortium should focus on improving boys' reading and writing skills and the achievement of pupils on free school meals, it says. They should identify underperforming schools and set improvement targets.
The report is also critical of the Department for Children, Education, Lifelong Learning and Skills (DCELLS), saying it has a "distinct lack of clarity in terms of mission and outcomes".
It says sections of DCELLS operate independently of each other, without understanding the full picture.
Some of the report's recommendations have already been implemented, including a reorganisation of DCELLS and the creation of a national standards unit, while others, such as national floor standards for schools, are set to be introduced.
Mr Andrews said the "significant" report contained some "hard messages", but added they should come as no surprise. "I described the Pisa (Programme for International Student Assessment) results as a wake-up call to a complacent system. This report is another wake-up call and we should all give it open-minded consideration," he said.
Mr Dixon said the report was an "accurate snapshot" of the state of Wales's education system and a "stark judgment" on the performance of previous education ministers.