A draft report concludes that the standards of most exams have been maintained but that maths A-level may be getting easier. It also says that candidates need a broader knowledge of their subjects as exam papers offer a smaller choice of questions.
The report, which looks at English, maths and chemistry exams dating back to the mid-Seventies, is understood to have been completed in June. Since then, it has been the subject of dispute between the School Curriculum and Assessment Authority and the Office for Standards in Education, which are jointly conducting the inquiry ordered by the Education Secretary more than a year ago.
Chief inspector Chris Woodhead, who called for such an inquiry early last year, has taken a personal interest in the Standards over Time project and is understood to be deeply unhappy with the draft.
The apparently inexorable rise in numbers of students getting better grades - A-level results have improved for the past 16 years - has sparked fierce debate, with traditionalists arguing that exams are becoming easier.
Others say better results prove that the GCSE and the Government's reforms must be working.
Either way, the inquiry has the potential to embarrass the Government. If it concludes that there has been no major dilution of standards, then right-wingers will claim that there must have been a cover-up. If, on the other hand, it points to a decline, Labour will claim the Conservatives are to blame, having encouraged schools to shop around for easy exam boards to boost league-table placings and allowed the market to let rip.
An indication of the tensions on the Standards Over Time project is the number of personnel changes on the OFSTED side, not all of which can be explained by retirement or promotions. The inspector who led the project for OFSTED, Alan Dobson, was moved after the draft was completed in June and has been replaced by Mr Woodhead himself.
Stories surfaced in August that "traditionalists" on the inquiry felt they were being pressed by ministers to produce a "whitewash" which would reject fundamental reforms of the exam system. However, Mrs Shephard has said that it would be difficult to whitewash a report she has yet to see.
The Department for Education and Employment is aware of the inquiry's problems but has remained detached. So far its involvement has been limited to agreeing a delayed deadline for the report's delivery: it is currently scheduled to be finished this autumn. It was once intended to see the light of day in March as part of Sir Ron Dearing's 16-19 inquiry.
A fundamental problem for the team is the lack of evidence, especially pupils' scripts. The draft report is understood to conclude that some diminution of standards is apparent in maths A-level, which has seen significant changes in syllabus content, particularly in statistics where performance has improved. No change in standards is apparent in mechanics but pure maths is less demanding. There is also understood to be less emphasis on algebra, problem-solving and reasoning, with a corresponding impact on performances at the higher grades.
The other most contentious subject, English literature A-level, has not changed fundamentally. Standards at A and E grades have not altered during the past 20 years, with writing skills at grade E a persistent problem.
Only small overall changes have been found in chemistry A-level with the inquiry believing that there is less factual content and more emphasis on comprehension.
A spokesman for SCAA said it was continuing to work with OFSTED on the inquiry. However, an Ofsted spokes- man said there was no date for publication and he knew of no particular personnel changes.
Whatever the inquiry's eventual findings, Mrs Shephard will want a reasonably unambiguous report which will not act as a hostage to political fortune. She may also hope that it will appear after the Conservative party conference, but before next spring, when electioneering starts.