Around 18,400 10 and 11-year-olds will now have to sit a third paper because questions from the first paper were seen in advance by at least 100 pupils.
There have been calls for two primary school principals to be sacked following claims that they deliberately leaked the questions. One political party has advised parents to boycott the third paper in early December, two weeks after the second exam which is also being reset.
And there have been suggestions that the debacle arose from a deliberate attempt to sabotage the controversial 11-plus system, which is widely criticised as dividing children into "successes" (the 35 per cent who gain grammar school places) and "failures".
The leak means allocation of grammar school places will be delayed, creating an administrative nightmare for the five local education authorities in Northern Ireland. It has also jeopardised the province's Department of Education's attempt to make the transfer tests more relevant to the primary curriculum and bolster parental confidence in them.
Education minister Michael Ancram said the first paper, which pupils sat last month, had to be scrapped after a departmental inquiry revealed at least six schools saw copies of the exam questions and four used them in mock tests. The questions may also have circulated through the network of 11-plus tutors.
Mr Ancram explained that the principal of a primary school who was helping to select questions for the paper (as an unpaid consultant) had asked another principal's advice (not officially allowed).
The second principal, who copied and circulated the questions, did not appreciate their status, the minister said. Neither principal has been named and no action will be taken against them.
"I am in no doubt that a grave error of judgment has been made," Mr Ancram said. "At the same time I am convinced there was no malicious intent." The department is now looking at ways to prevent future leaks.
David Allen, chairman of the Northern Ireland Teachers' Council, said the principals should be identified and dismissed: "I regard this as gross misconduct. Teachers have been sacked for much less."
Shamus Close, deputy leader of the Alliance party, said parents should boycott the third test. "Departmental dipsticks should not be allowed to cover up their incompetence," he said.