The Department for Education and Employment may relax rules and allow schools “in challenging circumstances” to pay more.

The maximum recruitment and retention allowance is currently pound;3,765 - available only in inner London and in failing schools.

The proposals, outlined in the DFEE’s submission to the School Teachers’ Review Body - currently considering the annual pay round - would lift that ceiling and extend it to other schools.

The submission says one option would be to pay the allowance “as a lump-sum bonus to a teacher who remains in post for a

specified period of time”.

But there is bad news on the performance pay front. Ministers confirm that teachers who cross the new threshold - giving them the chance to earn up to pound;30,000 a year - will have to wait two years before progressing further. P> And the Government’s much-vaunted offer of sabbaticals might have to be paid for out of teachers’ own pockets. Under a possible pilot scheme, they would take a 20 per cent salary cut for four years to earn the fifth year off.

The news comes as the controversial pay reforms came under fire from a senior Labour MP at the party’s annual conference.

Barry Sheerman, chairman of the Commons education select committee, accused ministers of introducing the scheme too hastily and failing to ensure it would work properly. His criticisms at a TES-sponsored Centre for Economic Performance meeting indicate the unease among backbenchers at the imposition of the scheme on a reluctant profession.

Professor Peter Dolton, an economist carrying out Government-backed research into performance pay for teachers, told the fringe meeting that teachers were now paid less than police officers and that the gap between teachers and nurses had narrowed significantly.