Ruth Kelly, the Education Secretary, rejected the review body's advice that excellent teachers should be paid up to pound;50,000 next year because she is worried it may cost too much.
The excellent teachers scheme will be introduced from September 2006 after a deal between the unions and the Government abolished the top two points on the upper pay scale.
Excellent teachers will be similar to advanced skills teachers in supporting the work of other staff but unlike ASTs they will only work in their own school.
The review body recommended that schools be given discretion over their salary within a nationally determined range. In 2007-8, this would have been Pounds 35,000-pound;50,000 for those in inner London and pound;35,875-pound;45,000 for those elsewhere.
Instead the Government has announced that excellent teachers will earn Pounds 35,874, except for those in and around London who will receive higher salaries depending on where they work. (see table, on page 18).
The excellent teachers scheme covers both England and Wales although it remains to be seen how enthusiastically it will be taken up in the principality. The advanced skills teacher scheme also applies to Wales, but as yet there are no ASTs there.
The review body rejected a move towards locally determined pay saying there "is still no appetite for major change" and dismissed calls for higher pay in challenging schools arguing that schools should be able to make such decisions without detailed guidance.
It also once again turned down government suggestions that maths and science ASTs could be paid higher rates to tackle shortages in the subjects. Schools have enough flexibility already, the review body said.
But the review body backed the Government's moves to forge a closer link between teachers' pay and professional development. A consultation paper is expected from the Training and Development Agency For Schools in the new year, setting out changes to be introduced next September.
Ms Kelly said the Government would take up the review body's suggestion to investigate the pay and conditions of teachers who are not attached to a single school but work directly for a local authority, and consider how best to ensure part-time teachers are treated equally with their full-time colleagues.