Education and Employment Secretary David Blunkett said that radical change was inevitable, but pledged it would be fair and open to a "very substantial part of the profession".
Amid speculation that entire schools rather than individuals would be rewarded with extra pay, Mr Blunkett told a Fabian Society conference that the changes were "not designed to reward simply those in schools already doing well. It will recognise and reward best practice wherever it is.
"It's not fair on those in schools that are designated on special measures or with serious weaknesses. There will be mechanisms so that good teachers struggling in very difficult circumstances will be able to access the programme."
Teachers will have to wait for the Green Paper on the future of the teaching profession, due to be published in a fortnight, to find out what that programme is. But Mr Blunkett hinted that rather than being simply a reward for excellence, the award of merit pay would depend on teachers making some commitment.
Cash for pay awards will be "ringfenced", Mr Blunkett told an audience made up largely of heads and deputies - heads in the past have complained they cannot afford to hire more experienced, expensive staff out of budgets which assume a fixed amount per teacher.
The present system of increments and inflation-linked annual pay awards will continue. "Nobody will be worse off," Mr Blunkett pledged. But the National Union of Teachers was alarmed to hear that a substantial across-the-board pay rise has been ruled out. Mr Blunkett said the Government could not afford it, and it would not achieve the changes ministers wanted.
The Green Paper is crucial both to recruitment and to achieving Labour's standards agenda. The current cap for classroom teachers of Pounds 23,000 deters many from entering or staying in teaching.
Quotas appear to have been ruled out - one teacher would not earn extra pay at the expense of equally talented colleagues, he said. But the Government is aware of the tension between the large numbers who will be put forward for rises and the restricted cash available.
"The challenge in small schools will be to make sure people don't feel denigrated if they don't immediately have the opportunity to move up the new pay structure," Mr Blunkett said.
And he admitted to journalists afterwards: "There's no way we can progress a large proportion of the profession in a couple of years. We're talking about over a teaching life."
He believed teachers would not take industrial action over what for many would mean a large pay rise. The changes were unlikely to raise eyebrows outside education, he said.