In a move to link pay more closely with performance, the current main pay scale for classroom teachers will be scrapped.
Heads will have the discretion to award teachers a salary anywhere in the pay band - between pound;21,588 and pound;31,552 for most teachers outside London - depending on how they perform in annual appraisals.
The controversial move, announced during chancellor George Osborne's autumn statement today, signals an end to the long-held assumption that teachers automatically progress up the pay scale each year, unless their head makes a case why they should not.
The Department for Education argues that the new approach drawn up by the School Teachers' Review Body will prevent teachers' pay being primarily a reward for time served, rather than how well they perform.
The move is likely to come in for fierce criticism from the teachers' unions, which have voiced strong opposition to pay reform, and are already engaged in work-to-rule industrial action.
The DfE insists the reforms would allow young teachers to reach high salaries more quickly, and help schools attract high quality staff.
Subject to a statutory consultation, the change will come into effect in September 2013.
Education secretary Michael Gove said: "These recommendations will make teaching a more attractive career and a more rewarding job. They will give schools greater flexibility to respond to specific conditions and reward their best teachers."
While national pay negotiations will be retained, schools will decide whether to pass increases on to teachers.
The move is likely to come in for fierce criticism from the teachers' unions, which have voiced strong opposition to pay reform.