Removing pupil referral units (PRUs) from council control will lead to a wholesale change in the way excluded children are educated, the government's behaviour expert has predicted.
Charlie Taylor said that offering academy status to PRUs for the first time - and the creation of a new, market-led approach - would lead to improvements in schooling for the most unruly pupils.
PRUs, which cater for children who are excluded, badly behaved, ill, are teenage parents or do not have a school place, were able to apply to become academies from last Monday and the first converted units are expected to open this September.
Some local authorities are already in discussions with the Department for Education about converting all their PRUs into academies, Mr Taylor told TES.
The former headteacher, who is writing reports for the DfE on both attendance and alternative education provision, hopes that schools will sponsor PRU academies.
Academy status would give heads of the units control over budgets and staffing for the first time. At the moment, these are controlled by local authorities.
Mr Taylor said that getting rid of the "monopoly" that local authorities have means that headteachers will be able to commission places in the PRU academy of their choice.
He also believes that this system will be fairer for mainstream schools. Currently, if headteachers do not use their local PRU - for example, if it is full up or does not offer the courses pupils need - they have to use their own budget to pay for children to go elsewhere.
Some PRU heads have criticised the introduction of a market for alternative provision. But Mr Taylor said that it would benefit children. "Good PRUs will be responsive to the needs of their schools and local population and will continue to thrive," he said. "Some of the best leaders in education run the units. They will come up with innovations, ideas for expansion and changing their services.
"I hope they will support mainstream schools, run provision for children from other local authorities and work with other local authorities to support other PRUs. This gives them a chance to reboot themselves."
In 2009-10, only 1.4 per cent of PRU pupils achieved five good GCSEs, compared with a national average of more than 53 per cent. "This is not good enough and many PRU heads would say the same," Mr Taylor said.
"I recognise that pupils can be damaged children who arrive in PRUs late in their school career," he added. "But the most important thing is that the units think about raising the bar. Some PRUs keep children safe and show them a good time: there's no academic rigour."