Pupils would take few external exams until they are aged 18.
The Government's 18-month Tomlinson review of secondary education, which is proposing the move, is also to push for changes to school league tables.
Under the proposals, GCSEs and A-levels will be replaced by a four-level diploma qualification by 2014. The highest A-level equivalent will be assessed mainly by external exams. But lower levels, including that taken by 16-year-olds, will predominantly be graded by teachers based on pupils'
work during the course.
The report, by a working group led by Mike Tomlinson, the former chief inspector of schools, will also propose:
* Teachers to be trained as chartered examiners to oversee internal assessment in schools.
* The diploma to be offered at pass, merit and distinction levels.
* All students to take compulsory courses in functional maths, English and information technology.
* Formal coursework to be scrapped in many subjects, replaced by a single, cross-curricular project at advanced level.
* Within the next three to four years, advanced extension awards and a compulsory project to be incorporated into A-levels, which would have A* and A** grades.
* A-levels to be cut from six modules to four.
A separate taskforce will also propose later this month that from 2008 students will apply to university after their A-level results are published, The TES can reveal. A-levels would be brought forward by two weeks, and university terms put back, to give an 11-week gap between the results being released and undergraduate courses starting.
The Tomlinson report is expected to call for changes to the school league table system. With an intermediate diploma at 16 seen only as a progress check, and most pupils staying in education until 18, the group believes it would make little sense for tables of 16-year-olds' results to continue.
A group member said: "There a lot of issues where change will be needed, including league tables."
One suggestion is that the tables should include groups of schools in the new system, encouraging collaboration.
Teacher assessment will be controversial. Ministers will be sensitive to fears that teachers' judgements may not be reliable, while unions have concerns about increasing staff workloads.
However, the group believes that extensive external testing at 16 will no longer be necessary and that teachers can carry out much of the assessment as part of their normal marking.
Ministers, who have committed themselves to cutting the number of exams pupils take, are likely to back the overall concept of the Tomlinson reforms.
However, they have not yet agreed to the details. Most of the recommendations will undergo lengthy trials before being implemented.