The BBC's Mike Baker: "These proposals would involve culture shock"

Introducing a consultative Green Paper on teachers' pay and conditions to the House of Commons, the Education Secretary David Blunkett said the £1bn-a-year package of "radical, modernising" reforms would create a "new professionalism" among teachers.

Both individual teachers' pay and school budgets would be linked to performance, in proposals that have already been condemned as unfair by the country's largest teachers' union.

Instead of national rates of pay, based on length of service and responsibilities, there will be a new system which rewards teachers who are judged to be high performers.

Mr Blunkett announced proposals for a "tough new appraisal system", carried out by headteachers, which will assess whether teachers should be paid up to an extra 10% in performance pay - an increase of about £2,000 per year.

These high-quality teachers, who show "high and sustained levels of commitment", will represent a majority of staff in a few years, Mr Blunkett predicted.

There will also be performance-related rewards for individual schools, with Mr Blunkett announcing £60m for "annual school performance bonuses", which will provide a fund to be divided among staff in schools which have shown consistent improvement.

David Blunkett wants a "new professionalism" among teachers

There is also to be a fast-track entry grade for the country's best graduates, promising rapid promotion to the Advanced Skills Teacher grade at salaries of up to £40,000. This is intended to help overcome the recruitment crisis which has seen teacher training colleges struggling to fill places on courses.

Teachers' pay and low status are seen as one of the reasons behind the shortage of graduates willing to join the profession, particularly in maths, science and foreign languages at secondary level.

At present, most classroom teachers start on around £15,000 and advance over several years to a maximum salary of just £23,000 - unless they take on extra duties.

The Green Paper also emphasises the importance of leadership skills for headteachers and senior staff, with the setting up of a National College for School Leadership. Mr Blunkett reiterated his support for more "superheads", who will be paid in the region of £70,000.

David Blunkett, on Radio 4's Today programme, says that linking pay to performance will improve education

Achieving better-trained teaching staff was also addressed, with the announcement of a pilot project to examine in-service training for teachers. There will also be a fund created for teachers to "improve their working environment".

In another measure to establish levels of competence, the consultation paper proposes that all new teachers will have to pass a national test in numeracy, literacy and information technology.

Small schools, which have faced problems in training staff, will be provided with a "support fund" to encourage them to share facilities and expertise.

David Willetts accused the government of adding to bureaucracy rather than helping schools

Mr Blunkett announced that the proposals will be open to consultation for the next four months.

The Shadow Education Secretary, David Willetts, questioned how much teachers would be assisted by the proposed changes, saying that the "bureaucratic burden" in schools had already worsened under Mr Blunkett's stewardship.

Mr Willetts said the government's existing attempts to improve teaching had had an unsuccessful launch. He claimed there were only 50 Advanced Skills Teachers and that there had been a "disastrous decline" in applications for the qualification for would-be headteachers.