Enterprise, responsiveness, competition, innovation. These are the watchwords of the Government’s favourite sector.

And ministers who claim that grant-maintained status is the most advanced form of self-government for state schools are keen to stretch the principle still further.

At present, opted-out schools must publish statutory proposals if they want to make a significant change of character such as opening or closing a nursery or sixth form, introducing or ending boarding, expanding accommodation by more than 25 per cent, or selecting more than 15 per cent of pupils by ability or aptitude.

The White Paper proposes to do away with that - and more. For if GM schools want to, ministers will also allow them to take responsibility for school transport, provision specified in statements of special education need, compelling attendance, and education welfare and pupil support grants.

Deregulation, it is argued, would give GM schools more opportunities to respond imaginatively and flexibly to the developing needs of their communities. The downside is that there could be no guarantee that funding would be available for every new initiative.

And with the Funding Agency for Schools - the quango which administers opted-out finance - telling schools not to bid for capital projects this year, the ambitions of some GM schools could be seriously curbed.

Local authorities claim any move to take over home to school transport could be costly. Essex and Kent, which have large numbers of GM schools, spend Pounds 36 million between them on school transport, and officials claim economies of scale allow them to negotiate good contracts.

A proposal by a GM primary in Essex to change its hours is likely to cost the authority Pounds 15,000 in additional transport costs.

David Whitbread, education officer with the Association of County Councils, said: “The mind boggles as to how deregulation of transport would work. ”

Pauline Latham, chairman of the Grant-Maintained Schools Advisory Committee, said expansion of sixth forms and nurseries would be the big issues for the sector.

John Haydn, head of Wymondham College, a GM boarding school in Norfolk, meanwhile welcomed moves to enable state boarding schools to admit boarders from outside the European Union and to charge them fees. Other issues for the sector - apart from selection - included spending more money on governor training within existing funds, reducing the term of office for first, foundation and sponsor governors to four years from seven, and independent ballot observers.

Ministers also said that as a last resort a body “on the lines of an education association” would be appointed to take over a failing GM school.