Schools and teachers are preparing themselves for intense scrutiny and tough new accountability measures after international test results revealed an "unacceptable" fall in standards.
Education minister Leighton Andrews said there could be "no alibis and no excuses" for Wales's "disappointing" performance in the Programme for International Student Assessment (Pisa) published by the Organisation for Economic Co-operation and Development (OECD).
In Wales, 132 schools and 3,270 pupils took part in the 2009 Pisa programme, which compared educational achievement in maths, reading and science across 65 countries.
The results, released on Tuesday, showed that Welsh 15-year-olds performed worse in all subjects than in the 2006 programme and fell further behind those in the rest of the UK. Performance in maths and reading was significantly below the OECD average.
Mr Andrews described the situation as a "systemic failure" and said the "harsh truth" was that schools in Wales were "not delivering the outcomes that young people need and deserve".
In a stark warning to the education sector, he said the results could not be "argued away or excused".
"Schools, local authorities and government need to look honestly at these results and accept responsibility for them," he said.
"If we are to secure a successful educational future for Wales, we cannot tolerate complacency in the classroom."
He said funding levels were not to blame because higher-spending nations like Luxembourg performed worse than Wales and lower-spending nations like Finland performed better.
He added: "We need to address this as a matter of absolute urgency. It requires honesty, leadership and a new approach to accountability."
But teaching unions and academics urged a period of "calm and reflection" and warned that "knee-jerk reactions and quick fixes" would only make matters worse.
Dr Philip Dixon, director of ATL Cymru, said: "This is not the time for finger pointing or blame shifting. It would be a mistake to look for one single cause; the results point to a whole-system failure.
"This is a crisis, but if properly addressed it could be the way to a much brighter future."
Both NUT Cymru and ASCL Cymru said strategies like the play-led foundation phase and the school effectiveness framework (SEF), needed time to feed through into the achievements of 15-year-olds.
David Reynolds, professor of education at Plymouth University, questioned if Wales had created an education system too much for teachers instead of pupils, and called for a period of "reflection".
Mr Andrews is expected to announce a detailed response to the report in the New Year.
But he warned: "Much of what we need to do will take time and it will be hard. Our young people deserve better."