The council - which says that the arts should play a central role in education from cradle to grave - plans to lobby the Government to fund extra-curricular arts education from the mid-week lottery.
It says schools should be encouraged to have a formal arts policy and a governor with responsibility for music, dance, drama and art. Pupils should only be allowed to abandon such subjects at the age of 16.
Christopher Frayling, chairman of the Arts Council's education and training advisory panel, said: "At a time when 'education, education, education' has at last taken centre-stage in public debate, the document could scarcely be more relevant.
"There now seems to be a broad public consensus on the importance of the arts in the educational process, and on the importance of the educational process for the arts."
The report, Leading through learning, says the council will work with the Teacher Training Agency to overcome the shortage of specialist arts teachers.
It will develop a network of arts education agencies across the country, directly funding them where necessary, to fill the gaps in services; disseminate good practice of artist-in-residence schemes; encourage arts organisations to work with children and families in after-school clubs; and promote opportunities to gain lottery funding, in particular through its own Arts for Everyone (A4E) scheme.
Maggie Semple, the council's director of education and training, said: "This report makes us serious players in the education field and in the popular arts and culture industries.
"It is our calling card across the major organisations as well as schools and colleges."
She said the council would be re-allocating the Pounds 4.5 million it spends on education and training to carry out the new proposals as well as using lottery money.
Leading through learning, from the Arts Council of England, 14 Great Peter Street, London SW1P 3NQ. The report is based on 18 months of consultations with regional arts boards and representatives from local authorities, the arts, education and training