Schools should report racist pupils and record and publish racist incidents in school, the Stephen Lawrence report recommended this week.
Sir William Macpherson, author of the report, urges schools and society to adopt "specific and coordinated action" to eradicate the disease of racism.
Some schools, he says, have resisted anti-racist policies and where they exist, such policies are largely ineffective.
The report wants new powers for local authorities and inspectors allowing them to promote racial awareness in the classroom. It also calls for changes to the national curriculum, which it says fails to reflect the needs of a diverse multi-ethnic society.
The large number of black teenagers excluded from school was another concern, and Sir William wants league tables of pupils excluded, broken down into ethnic groups.
The inquiry into the murder of the Stephen Lawrence six years ago makes 70 recommendations including making it a crime to use racist language or possess an offensive weapon.
The report accuses the Metropolitian Police of "pernicious and institutionalised racism". However, Sir William said institutional racism was "not the prerogative of the police service. Those dealing with housing and education also suffer from the disease."
Doreen Lawrence, Stephen's mother, welcomed the emphasis on education in the report and said if those who had murdered her son had been better educated they would have better understood the role played by black and ethnic-minority people in creating the society in which we live today.
Education Secretary David Blunkett said he would be considering all the report's recommendations for schools. He said: "This is about how we treat each other and, importantly how we learn to respect ourselves and one another as citizens. That learning comes from home, at school and the wider community."
Recent research in Cardiff found 50 per cent of incidents investigated by the Race Equality Council had involved people under 16, and a quarter involved children between six and 10.
Graham Lane, chair of the Local Government Association, said schools had a key role to play in wiping out racism. He said: "Children are not born racists, it is society that turns them into the kind of people who murdered Stephen Lawrence."
However, union leaders warned against a "knee-jerk" reaction. David Hart of the NAHT said: "While we have every sympathy with the report, the responsibility for fixing the ills of society must not be thrust solely on schools."
Consider amending the national curriculum to value cultural diversity and prevent racism;
* Give councils and school governors a duty to implement anti-racist strategies including:
* schools to record all racist incidents and report them to pupils' parents, governors and LEA;
* numbers of incidents to be published annually by school;
* ethnic-minority exclusions to be published annually by school.
* Extend inspections to examine implementation of the strategies