Introduced in 2000, the upper pay scale was a fudge between New Labour’s desire to introduce performance pay to the public sector and the need to keep teaching unions on board by offering their members access to higher salaries.

So far it has achieved the latter with more than 90 per cent of eligible candidates progressing through the first two rounds. But ministers have argued for some time that this is unsustainable. This year Charles Clarke, the Education Secretary, told the School Teachers’ Review Body that it would add pound;700 million to English school wage bills by 2010.

The Government’s crude 30 per cent quota system for progression to the scale’s level 3 was rejected by the review body, much to unions’ relief.

But it has given all parties just six weeks to solve a problem that has been festering for years.

There are some very basic guidelines. The review body says the talks will need to come up with rigorous criteria to identify the best teachers, a grading system to rank the teachers and a system of external assessment.

It says: “Assessing, evaluating and grading performance is not alien to schools; indeed, in relation to pupils it is part of the culture of education.”

But beyond that everything is open and a new system of management allowances has also been thrown into the melting pot. Positions are already entrenched and the language being used by all parties is far from optimistic.

Mary Bousted, general secretary of the Association of Teachers and Lecturers, anticipated “tough” discussions and John Dunford, her counterpart at the Secondary Heads Association, predicted that agreeing a solution within such a tight timescale would be “very difficult”.

David Hart, the National Association of Head Teachers’ general secretary, warned that any attempt to “squeeze” performance pay for teachers would be bound to lead to a revolt.

And Eamonn O’Kane, general secretary of the National Association of Schoolmasters Union of Women Teachers, questioned the statement by Mr Clarke that the talks should take place without preconditions. He said the decision to introduce new management allowances a year earlier than the review body recommended did not “bode well” for the discussions.

The best hope may be a compromise that allows the majority of candidates to progress to level 3 but dramatically alters the system for levels 4 and 5, possibly scrapping one of them.

Mr Clarke recognises it will be “difficult” to find a solution but said he was heartened by the success of the workload agreement. He is now statutorily obliged to include the National Union of Teachers, even though he is barely talking to the union because it did not sign the agreement.