The National Strategies Organisation will no longer be responsible for negotiating and agreeing local authorities' school targets from next year.
Instead, a national team of specialist "children and learner strategic advisers" will be set up to carry out the work with local authorities.
The advisers will be responsible for education targets, including early years, and those related to children and young people; at present, some are set in negotiations with staff from the National Strategies and some during negotiations with staff from the regional government offices.
The contracts for existing children's services advisers will end in March 2010, despite a Pounds 64 million one-year extension to the main National Strategies contract.
The new service will go out to tender and be provided to all local authorities from April 2010. A body will be charged with carrying out the work and will answer to the regional government offices.
The move will raise further questions over the future of the National Strategies. The Department for Children, Schools and Families has said it will consult stakeholders on which services should be provided in future by the organisation. The idea is already being tested in Darlington, Solihull and South Tyneside, with Wolverhampton and two London authorities expected to join the pilot scheme.
Debbie Jones, of the Association of Directors of Children's Services, said: "In theory, it should be better because local authorities will be dealing with one organisation instead of two - the National Strategies and the Government Office.
"But the devil will be in the detail in terms of how the overall provision pans out. In this case, it will be in the detail of the specifications drawn up by the procurement process. The details will depend on how the pilot goes."
The Government is cutting the number of education targets that local authorities must set from 170 to a minimum of 42. There are six targets for achievement and progress at key stages 2 and 4, for seven groups: black Caribbean, black African, black other, Pakistani, white other, Travellers and pupils eligible for free school meals. Authorities will also be expected to set targets for groups in their area who perform significantly below the local authority average.
The National Strategies runs training programmes for early years practitioners, primary and secondary teachers and managers. Capita has held the Pounds 177.5m contract since April 2005, when it won it from CfBT. As well as the central funding, the Government gave Pounds 370m to local authorities and schools towards National Strategies projects in the last financial year.