Most schools in England will get powers to vary the curriculum and teachers' pay after the Education Bill finally became law last week.
Ministers will now press ahead with plans to grant around 12,000 schools new freedoms. Sixty per cent of primaries and 30 per cent of secondaries will be able to opt out of key parts of the curriculum and teachers' pay and conditions.
The Government was forced to expand the number of schools eligible for the new powers after Opposition peers threatened to vote down the proposal. Originally only one in 10 schools was expected to qualify.
The scope of the new freedoms will be decided after consultation. Schools wanting "earned autonomy" will apply in April and get new powers the following September.
For the first time schools will be able to opt out of part of the national framework on pay. The performance pay "threshold" system, however, remains sacrosanct.
The criteria for qualifying for earned autonomy have yet to be set but those that do not qualify for autonomy or who want freedom in areas other than the curriculum and staff pay will be able to apply to the Secretary of State under the separate "power to innovate".
Peers approved plans to allow schools to form companies by just eight votes, overturning previous government defeats. This allowed the Bill to reach the statute book before Parliament's summer recess.
The new Act will allow schools to join together in federations to help failing schools. It also gives the Education Secretary the power to force a local authority to increase its education budget. And there will be a legal definition of the tasks that only teachers can perform.
The Qualifications and Curriculum Authority has been given new powers to intervene when exam boards make mistakes. Reforms for church schools mean Anglican schools must now consult diocesan boards of education over admissions policies. No faith school will be able to turn away pupils from other religions if it has spare places. There is also a requirement for teachers to look out for signs of child abuse.
Peers inflicted several defeats on the Government during the Bill's passage through the upper house. Plans to give heads more influence over local authority budgets were watered down after peers forced the Government to make new "schools forums" purely advisory.
Although a Tory amendment to limit the paperwork sent to schools was eventually defeated, the Government was forced to introduce a clause promising to consider the impact of paperwork on teachers.