Nord Anglia, which owns 15 independent schools in this country and six overseas, said ministers depended too heavily on their powers of persuasion, and the goodwill of schools.
It warned the Government that there was no guarantee of long-term success if it went ahead and abolished the grant-maintained sector in an attempt to put all schools on an equal financial footing.
And the Cheshire-based company claimed local authorities were exercising "velvet coercion", preventing the development of a genuine alternative to local government.
"Competition should not be a dirty word in education," it said. "A degree of external competition would give disproportionate results in energising schools and local education authorities."
Nord Anglia, floated on the stock market earlier this year and the largest provider of English language courses in the UK, spoke out in its response to the Government's White Paper which sets out the plan for three new categories of school.
It said the private and voluntary sector should be able to bid to provide services currently offered by local authorities and accused the Government of being equivocal about publicprivate partnerships.
The company, working under contract for the careers service and running inspections for the Office for Standards in Education, believes businesses have been given no real chance to grow.
It said they should be able to bid to take over failing local authorities and supervise improvement in failing schools as well as running summer literacy and numeracy centres.
"We are aware of distrust of our sector. It is a distrust that is unfounded because Nord Anglia has no time for exclusion or elitism. Companies such as ours do not wish to supersede state education: we wish to supplement and support it."
It claimed Government proposals would not provide a once-and-for-all solution to the problem of raising standards and said that handing over a small - failing - part of the service could act as a spur to all.
White paper reactions, News, page 8, Analysis, page 26.