The paper sets out radical changes for Connexions, the Pounds 450-million-a-year pastoral advice and careers guidance service for 13 to 19-year-olds.
From next year councils will manage the service, although the Government hopes they will keep the Connexions "brand". But if schools are unhappy with it they will have the cash to buy services from voluntary groups or private companies.
A separate Government report this week found there was confusion over the roles Connexions and schools are meant to play in careers advice and that teachers did not always give impartial advice.
John Dunford, general secretary of the Secondary Heads Association, welcomed the freedom to opt out. But Les Lawrence, Local Government Association lead member for youth services, said that would end economies of scale, jeopardise the impartiality of advice and fail to help disengaged teens.
Unison, which represents 15,000 Connexions staff, said the plans would worsen their already low morale.
The End to End Review of Career Guidance is at www.cegnet.co.uk