David Blunkett, the Education and Employment Secretary, has proposed a new pay structure and a fast-track career route which will allow high-flyers to become headteachers by their early thirties.
Teachers will be appraised annually and pay will be linked to performance and pupils' progress. Mr Blunkett said: "The result ... will be a significant increase in salary for many teachers."
The changes, proposed in the Green Paper, Teachers - meeting the challenge of change, are the Government's attempt to head off a recruitment crisis and attract good graduates to the profession.
In the introduction, Prime Minister Tony Blair says: "After decades of drift, decisive action is required to raise teaching to the front rank of professionals."
Mr Blunkett realises he will have a fight selling performance-related pay to teachers.
The paper says: "Few professions have turned their back on linking pay and performance to the same extent as teachers."
Already the two main classroom unions - the NUT and NASUWT - have said they will not support a pay system which relies on PRP.
But the heads' unions are likely to be more co-operative. Their leaders expect heads to be given greater powers in return for carrying out the pay changes.
John Dunford of the Secondary Heads Association, said he would support the scheme if most teachers can benefit .
There will be two new pay scales for teachers, linked by a performance threshold at point 9 (#163;22,410). Teachers will be assessed by their head and an external consultant and, if successful, will receive a 10 per cent pay rise.
Any further pay rises will be related to performance, and teachers will be given targets and monitored. They could earn up to #163;35,000 on the higher scale. Teachers can then progress on to a leadership spine and become advanced skills staff on up to #163;40,000 or move into school management and earn up to #163;70,000.
Other ideas in the paper include a School Performance Award and a competition to design the staffroom of the future, organised by Lord Puttnam with The TES.
"The shabby staffroom and the battered kettle - endured for so long because teachers always chose to put their pupils first - can become things of the past," says the paper.