Speaking at the launch of a policy paper on the role of modern local education authorities, she said they should help heads to set and monitor tough targets for services but leave the actual delivery to the private sector.

Ms Morris announced the Government wanted to consult on legislation to let education authorities farm out some work to private firms, voluntary groups and other councils. Only core functions, including rescuing failing schools, special needs provision and control of school transport should remain with the authority, she said. Authorities should make the cost of their services clear and foster an “open market”.

They were already supposed to pass on at least 80 per cent f central government education money to heads. They should now help schools be “more effective purchasers” so they could use the delegated cash to improve standards.

The Government also wants to see the creation of “independent brokerage services” that would connect schools with suppliers offering the best value.

Ms Morris said: “We are working with authorities to identify and disseminate good practice.”

The Local Government Association said the paper contained many ideas it had already adopted and claimed the Department for Education and Employment itself was often the biggest obstacle facing modernisers.

Chris Waterman, general secretary of the Society of Education Officers, said:

“I was very pleased indeed to hear Ms Morris identify such a positive role for LEAs.”

The policy paper is on the web at www.dfee.gov.uklearolepolicypaper