Introducing the first of six conferences in London and York on improving schools, the Secretary of State said the Teacher Training Agency is to start work on developing national standards of competence for four key points in the teaching profession - including that of expert classroom teacher.
Criteria will be established for governors to assess whether a teacher should be rewarded for excellence and given more pay and status. Professional development will also be monitored by an appraisal system "with teeth".
Mrs Shephard said she was not happy with the way the present system of appraisal was working and wanted a more uniform approach.
She said the time had come for the profession to recognise that good practice must be rewarded. She said the Professional Association of Teachers recognised this and welcomed recent remarks by David Hart, general secretary of the National Association of Head Teachers, who said performance-related pay was the only way to reward excellent classroom teachers who do not want to take up management positions.
Reversing the union's opposition to PRP, he said: "Very few members of the profession likeperformance-related pay. Nevertheless, a cohort of advanced skilled teachers cannot be created without it.
"The best teachers will want more than just praise. The worst will have to be dealt with as a matter of emergency."
Peter Smith, general secretary of the Association of Teachers and Lecturers, does not believe governors are qualified to make decisions on a teacher's professional worth.
He is also suspicious of appraisal being linked directly to pay. "Distributing bouquets and brickbats is not the way to encourage professional development, " he said.
Anthea Millett, chief executive of the TTA, is putting less of a political spin on the creation of an expert grade than the Department for Education and Employment. Her office be will consulting in May on ways to restructure the teaching profession.
The TTA has in mind a four-point progression from newly qualified to main grade to expert to, for example, subject leader.
The TTA feels that PRP is politically sensitive and is looking to create a grade for a fully-rounded professional practitioner and not a "superteacher". The TTA is also concerned that appraisal is not linked to pay.
While appraisal is at present patchy and often linked to finite Grants for Education Support and Training, the TTA believes there is some consensus within the profession on devising a method of assessing professional development and hopes to build on it.
Mrs Shephard announced at the conference in Wembley, London, that schools which have been identified by the Office for Standards in Education as outstanding will be used to provide a benchmark for other schools.
She said her department would also be making sure schools are aware of the national targets - for example for 85 per cent of 19-year-olds to achieve five GCSEs at grade C or above or an intermediate GNVQ or an NVQ level 2 - and that they should be posted on every staffroom wall.