Educational psychology services are set to be opened up to market forces and the profession completely restructured so practitioners are no longer tied to local authorities.
Department for Education ministers have launched a consultation on the future of "ed psychs" and their training, suggesting the profession cuts ties with councils and instead works directly for schools or parents.
The proposed changes - which suggest professionals should have a wider role beyond working on statutory statement assessments - have been criticised by professional groups amid warnings that some children could miss out.
England has 2,156 educational psychologists (EPs), the majority of whom are local authority staff.
"EPs themselves are moving to a more varied pattern of employment - some with private sector providers of education services, and into private practice with the potential also to form social enterprises commissioned to run services," the review document says.
The consultation paper suggests that fewer educational psychologists will be employed by local authorities and that their work should be "commissioned" by councils, schools and even parents.
Funding problems, which last year left the training of new entrants to the profession in crisis, also mean there will be a review of courses and the way they are financed. Local authorities were expected to voluntarily fund PhD training, but a third withheld cash last year and the Government had to step in to make up the shortfall.
The consultation is also considering the development of a new training path for practitioners.
"The way in which the profession is employed is changing. It is likely that fewer EPs will be directly employed by LAs in future, with more EP services being commissioned by LAs, clusters of schools and individual parents," the consultation document says.
These proposals have had a mixed response from the profession's leaders. Michael Hymans, chair of the National Association of Principal Educational Psychologists (NAPEP), said: "Educational psychologist services will be put out to trade, but what happens if schools don't want to buy them, or if they prefer to buy from a neighbouring council area? It could lead to a messy situation.
"It could be hard to predict how much services will be used. It could lead to more educational psychologists being employed on fixed-term contracts."
Kate Fallon, general secretary of the Association of Educational Psychologists, agreed. "There is no shortage of schools wanting to use the services of educational psychologists, but what effect will these changes have on children who are out of school - will they have the same access?" she said.
"These are huge changes and we are examining them carefully."
CONSULTATION: NEXT STEPS
The Department for Education is consulting a specially formed "expert group" comprising representatives from training bodies and "key stakeholders".
These include the Association of Educational Psychologists, the National Association of Principal Educational Psychologists, the British Psychological Society, the Association of Directors of Children's Services, the Department of Health, and headteachers.
Evidence will be gathered until June this year. An interim report is due in July and the final report and recommendations are due in September.
New training arrangements will begin in September 2013, and the DfE will follow current arrangements to fund courses for educational psychologists in 2011 and 2012.
Original headline: Ed psychs set to go it alone in employment shake-up