The move comes as schools standards minister David Miliband said teachers should not be rewarded for “competence” but for excellence.

Ministers are to consult on a major expansion of PRP within the next few months.

This week, it emerged that the School Teachers’ Review Body is seriously considering a highly contentious government proposal to introduce merit pay throughout the profession.

The STRB has commissioned research on headteachers’ views of performance pay, and whether it should be extended to more teachers. But major changes are unlikely to take place until next year at the earliest. The review body, which publishes its annual salary recommendations next week, is expected to recommend a rise at or near inflation, currently 2.5 per cent.

There was also speculation this week that the STRB might only suggest a one-year pay deal, despite ministerial pressure for a three-year settlement.

The STRB was also expected to respond to government suggestions that the use of management points for teachers should be scaled down to reflect the fact that administrative tasks are transferring to support staff under proposed workload-reducing measures.

Mr Miliband told the British performance management conference in Bournemouth that the principle of performance pay was “gaining acceptance among a number of headteachers”.

But he implied it needed to be revamped. The problem, he said, was that only a minority of heads were operating rigorous performance-management systems to back pay decisions. The speech reflects government anxiety over merit pay. Ministers have been unhappy about the number of senior teachers who have received pound;2,000 threshold bonus payments.

Ninety-seven per cent of staff who applied in the first round of the scheme in 2000 were successful, and at least 80 per cent are likely to receive an additional pound;1,000 to progress further up the pay spine.

There is also concern that most heads have not taken advantage of a series of bonuses available to support recruitment and retention, for fear of alienating other staff.

Last summer, the Government provoked outrage by suggesting to the STRB that performance pay should be considered for less experienced teachers, ending automatic yearly pay increases.

Eamonn O’Kane, general secretary of the National Association of Schoolmasters Union of Women Teachers, said: “Sensible headteachers know that introducing differential pay based upon performance is a recipe for disaster.”

Mr Miliband also announced that the Government will no longer be using external assessors to check heads’ decisions about which teachers qualify for pound;2,000 threshold bonuses.

Instead, from 2005, the Government will rely solely on decisions by heads, said Mr Miliband. Atthe same time, schools will be expected to make threshold payments from within their own budgets.

The classroom unions voiced concern over the assessors’ removal. John Bangs, the National Union of Teachers’ head of education, said it would undermine the fairness of the decision and heads’ judgments could be challenged at employment tribunals.

But John Dunford, general secretary of the Secondary Heads’ Association, said: “Threshold assessors have confirmed 99 per cent of heads’ judgments.

That’s a waste of public money.

“The idea these people had to be there because heads were soft is a nonsense. They outlived any usefulness they had in the first year.”