From 2006, secondaries will be ranked not only by "raw" GCSE and A-level results, but on the progress pupils make given the deprivation affecting them.
The number of pupils on free school meals, with special needs and with English as a second language are all likely to be factors in new "contextual value-added" measures of pupil progress.
Similar measures will be introduced for primary tables in 2007.
The new CVA measure will also be used for inspection judgements and be available to help teachers set targets for pupils.
The move has been welcomed by critics of the current tables. John Bangs, head of education at the National Union of Teachers, said: "This is something we've been advocating for years.
"It does not validate league tables. But it means that, at long last, the Government is recognising the impact on school performance of background factors over which teachers have no control."
Critics have complained since the tables were introduced in the early 1990s that they favour schools in prosperous areas. Even when the current "value-added" calculations were introduced two years ago, the complaints did not stop.
These tables measure the progress youngsters make between entering either primary or secondary school and leaving it, - but without reference to their backgrounds. Many said it still was easier for schools serving middle-class areas to help pupils progress and thus do well in value-added than for those in poor neighbourhoods.
Unveiling the decision at an Education Network conference in London, Caroline Macready, the Government official in charge of school accountability, said it would help "level the playing field between schools in different circumstances".
From this year, schools will be able to compare their achievements at, say, GCSE, with how well the CVA model suggests a particular cohort should be doing given their results at the end of key stage 3 and the challenges they face.
Another likely factor in the CVA calculation is the proportion of boys or girls at each school.
Schools with more girls are expected to do better, given the fact that girls now outperform boys in every age group.
Martin Ward, deputy general secretary of the Secondary Heads Association, said the change was welcome, but that the union still had concerns about whether CVA would accurately account for the effetcs of deprivation.
In particular, he was worried that it would use free school meals as a measure of parental poverty. This has been criticised as inaccurate.
A Department for Education and Skills spokeswoman said that full details of what factors would be included in the new measure would not be finalised until later in the year.
Schools can see how the new tables will work at www.standards.dfes.gov.uk performance