Small schools, both special and mainstream, are the key to improving the lot of children with special needs, many of whom are struggling to succeed in large mainstream institutions.
Giving the General Teaching Council for Wales's annual education lecture in Cardiff this week, Baroness Warnock reiterated her previously published concerns that the current special educational needs system she helped create was now failing many children.
The then Mary Warnock chaired a committee of inquiry into special needs which reported in 1978. It promoted the inclusion of special needs children into mainstream education, and proposed the current system of statementing those with the most complex needs.
Baroness Warnock, addressing more than 300 people at the National Museum and Gallery in Cardiff, said large numbers of children were now trapped in mainstream schools, "learning nothing and knowing themselves to be failures".
She identified those with emotional and behavioural difficulties, or with Asperger syndrome or autism, as having particular problems coping with the social interaction and sensory overload of large secondaries.
And she suggested that the development in England of specialist special schools, and special schools that send their teachers out to support mainstream colleagues, could provide a future model for Wales.
"The time has come to hold a thorough review of the future provision and nature of special education," she said. "There are some children who can never flourish in large secondaries or other mainstream schools.
"It's these young people - many having suffered from repeated failures in mainstream schools or coming from chronically unstable backgrounds, the looked-after or mildly autistic - for whom a small school is essential educationally and socially.
"It's these children who are being treated with cruelty if they have to attend mainstream schools in the name of inclusion."
She said she was unconvinced that special needs units in mainstream schools could provide for both inclusion and meet the needs of SEN pupils, as their financial and educational requirements would be secondary to the school.
Separate special and mainstream schools, co-located on the same site, with their own heads, governors and budgets offered a better solution.
But she added: "The best solution is for pupils to be educated in special schools, small, well-equipped and with a high ratio of teachers to pupils.
"Even if ideologically acceptable to local authorities, this is expensive.
Our response is that the policy of inclusion itself is very expensive."
In a question-and-answer session after the lecture, Bridgend educational psychologist Karon Oliver described observing a blind boy holding on to the railings at playtime in a mainstream school.
"He wanted to be friends with the other children but couldn't access their world, kicking a football," she said. "If a child in mainstream fails, do we allow them to fail or do we consider what's best for them?
"We should look at each child's abilities and needs and address it that way."
Baroness Warnock gave evidence last year to Assembly members looking at the statementing of children with special needs.
The annual lecture was the third organised by the GTCW. The previous speakers were Professor John Andrews, former chairman of the GTCW, and Professor Tim Brighouse, chief adviser to the London Schools Challenge.
The council has already started the search for its 2007 speaker, and approached Rowan Williams, Archbishop of Canterbury.