Ministers have set aside pound;10 million for the early retirement of heads "who are not able to carry forward the major changes envisaged in improving education". Their individual pension funds will get boosts of up to pound;50,000 if they go.
Only heads aged between 55 and 59 will be eligible, about 10 per cent of the 25,900 headteachers in England and Wales. But the National Association of Head Teachers said its phones had been "white-hot" with enquiries. The union received 250 calls from heads in two days.
Prematurely retiring classroom teachers and deputy heads will remain eligible for only "actuarially reduced" pensions and heads of failing schools or those with serious weaknesses are excluded from the scheme.
The surprise announcement has been condemned by the National Union of Teachers as an attempt to buy off the headteachers who are expected to implement Green Paper reforms, including the unpopular performance-related pay proposals.
Local authorities are invited to bid for government grants of up to pound;25,000 for each head (matched by their own money) by December 3.
To qualify for the pay-offs heads will have to have at least five years' continuous service. Their applications will have to be supported by Office for Standards in Education reports proving their schools are not failing. The heads' local authority will have to confirm that the applicant is "unlikely to adapt well to carrying forward the major changes envisaged in improving education".
Avril Walton, assistant director of education with Wigan Council, said the tight timetable for applying for the grants was horrifying.
"The way in which you ring a head to ask whether they are interested in this kind of scheme is a very sensitive issue. It could be constructive dismissal if you don't get it right," she said.
The scheme comes at a time when the numbers of teachers taking early retirement has fallen sharply due to the Government's insistence that local authorities should contribute to early-retirement packages. As a result the numbers taking up deals fell from 19,049 in 1997-98 to 2,917 last year.
Kerry George, senior assistant secretary at the National Association of Head Teachers, said there was unease in one authority where officers had decided to ring all eligible heads.
But she welcomed the principle behind the scheme: "We have told the Government we want a return to orderly and proper early-retirement arrangements and we see this as a move in the right direction."
John Dunford, general secretary of the Secondary Heads Association, said: "This scheme is very limited and for headteachers only. Nevertheless this is very welcome."
The scheme is one of the new Standards Fund grants designed to support the Green Paper on teachers' pay and conditions.
Other grants include pound;117m to employ 15,000 full-time teaching assistants next year, pound;60m to support small schools, pound;40m for improvements to staffrooms across the country and pound;12m for performance management training. Local authorities will be expected to contribute a further pound;70m to the schemes.