Heads and recruitment experts have warned that the new move will cut off a valuable supply of teachers for inner city schools, particularly struggling primaries where budgets may be tight.
The ban, effective from September 1999, is the result of the Teaching and Higher Education Act which wants to protect newly-qualified teachers by insisting they cannot undertake their compulsory induction year in a failing school.
The Act also bars failing schools from running on-the-job training schemes for graduates - another source of teachers.
However, the new legislation looks like being good news for the teacher supply agencies. Their staff, many of whom are foreign, make no attempt to undertake induction years, or to train on the job and are therefore exempt from the rules.
Australians who come to Britain for a few months on a working visa will be free to teach in failing schools - on a non-qualified basis. Meanwhile newly-qualified teachers from British universities will be barred.
Headteachers say the ban is alarming and warn that failing schools will be unable to turn themselves around unless they can choose the best teachers available.
"They're ruling out a great deal of commitment and enthusiasm," said Kerry George, a senior secretary with the National Association of Head Teachers.
"It arrogantly assumes that all probationers are delicate little blooms who should learn their job somewhere nice."
A spokesman for the recruitment analysts, Education Data Surveys Ltd, was also critical. "This could be very problematic for London, particularly for primary schools with small budgets and where pupil numbers are declining, " he said. "Newly qualified teachers are cheap."
London has more foreign teachers and more failing schools than any other part of Britain.
Schools in the capital already rely on foreign supply teachers. Government figures from 1995 suggest that Australasian teachers covered 11 per cent of teaching hours in the south east. At the same time, nearly one in five of all failing schools is in London.
Although the detailed regulations setting out the ban are yet to be published, ministers have made it clear that new teachers will not be allowed to spend their induction years in failing schools.
The capital already has a gathering teacher recruitment problem. Primary vacancies in inner London have doubled from 1.8 per cent of the teaching force to 3.6 per cent in the past two years.
Timeplan Education, one of the largest recruitment agencies, estimates that about 25 per cent of its 2500 teachers are from the Commonwealth - the majority working in London.