The annual controversy over exam standards took a Kafkaesque turn this summer with examiners actually arguing among themselves.

Until this year, the exams world has maintained a united front around two basic propositions. First, standards have been maintained and nothing is amiss; second, improvements are in hand to build on that success, with the reforms to make A-levels harder. These will culminate in the new A* grade next summer, which will resolve all issues, notably the difficulty for universities of distinguishing the most able candidates in a world where more than a quarter of candidates gain at least one A grade.

Yet this Panglossian view was undermined by Jerry Jarvis, managing director of the exam board Edexcel. He suggested that “complementary measures of performance” may be needed to distinguish bright students as there will be “increasing discrimination issues as more and more students make that grade”.

This is odd, since A* is supposed to do precisely that job. Even more controversially, Mr Jarvis argued for “recalibrating” standards to raise the bar as pass rates rise.

His comments were rejected by other exam experts, particularly Greg Watson, chief executive of the OCR board, who argued that A* will solve the problem of discrimination, since “when we sit here next year, there will be a smaller category of students who have cleared the highest hurdle”. However, Mr Watson’s remarks only underline a major division in the examination world between those who accept the A* and those that don’t. Specifically, some universities will demand A*, while others will not.

This situation arises because of divided counsels within Government. Two committees have disagreed over the A* grade. The first committee on exams, set up in October 2007 by Ed Balls, Schools Secretary, assessed the evidence on A*. It concluded in March 2008 that this was the answer to the discrimination problem, and cancelled two tried and tested quality measures of achievement - the Advanced Extension Award (aka the old A- level Special Paper) and the International Baccalaureate (IB). The Government withdrew support for extending the IB into state schools because it believed, at the time, that A* was an all-weather solution, so no alternatives were required.

But later, in October 2008, the National Council for Educational Excellence (NCEE), chaired by Prime Minister Gordon Brown, decided that the A* was “unpredictable” since it was based on new syllabuses and new exams and so should not be used for university entrance for three years - to allow it to bed in. As a Prime Minister outranks a Schools Secretary, the Government adopted the bizarre position that the A* can be awarded but must not be used for university entrance until 2013.

This is a position the Government cannot enforce. Cambridge, University College London and Imperial College London have decided to use A* from 2010, despite predictions that this will aid the public schools that claim their students already get a 50 per cent pass rate at the A grade. Nor will the proposal to publish module marks paper by paper help to discriminate, since they have been published for several years and are available for admissions tutors who ask for them.

The A* has, in fact, split the education world into two camps. The pro-A* lobby includes Dr CJ Parks, head of admissions at Cambridge, who was a member of the Balls committee. In the exam world, Dr Mike Cresswell, director general of the AQA, the third of the big exam boards, supports the A* and, like Cambridge, sees no reasons for the new grade to have to bed in. He argues that it will be as valid next year as in five years’ time.

The anti-A* lobby includes Professor Steve Smith, vice-chancellor of Exeter University, who ran the higher education section of the NCEE for the Prime Minister, and Dr John Dunford, general secretary of the Association of School and College Leaders, which never wanted the A* in the first place.

In the short term, the pro-A* lobby has a strong case. To the extent that A* is merely a grade awarded at 90 per cent of marks instead of 80 per cent for an A grade, it is probably workable. It is certainly illogical for the Government and its NCEE to argue that the A* is unpredictable because of new syllabuses and exam methods, since if this were true, all grades would be affected. No one has yet suggested having no predicted grades at all for 2010 university entrance. In fact, it would be impossible to run the university entrance system without them.

However, there is a deeper problem that threatens the credibility of the A* grade: the question of stretch and challenge. In theory, the new exams next summer will be harder than the current A-levels, and for this reason the university admissions watchdog Ucas has downgraded the IB against A- level. But will it actually be harder?

A* may be simply another aspect of grade inflation, with a further new grade needed at 95 per cent - such as an A** - if marks rise without a corresponding increase in standards. The authorities claim to have carried out tests showing that the new exam does, in fact, have higher standards. But the tests have never been published.

This may be the underlying reason why Mr Jarvis is calling for a recalibration of A-level grades. If the standard has not been maintained and will not be improved by the new system, it would be logical to recalibrate. It is also significant that Mr Jarvis called for complementary measures to discriminate performance. This threatens to dethrone the A-level as a system for university entrance, but it is clear that there is less controversy in this area of the debate.

Dr Cresswell, while supporting the A* grade, thinks it should be used “in terms of a selection process that takes into account a broad view of standards”. Dr Dunford, while opposed to the new grade, believes A-levels are not sufficient and “that is why American universities use Sats - because these are a measure of potential, whereas A-levels are a measure of achievement”. In lay language, both agree that the A-level does not assess ability.

In the very short term, there is one step that could be taken immediately to rescue something from a potential descent into chaos: restore the old A-level Special Paper. The Advanced Extension Award is, after all, a tried and tested way to discriminate high ability. If that were put back into place, then other measures to restore the ability of exams to evaluate ability could be considered - a possible solution to an exam system that is now deeply divided and in serious trouble.

• Trevor Fisher, Teacher at a Staffordshire sixth-form college.