Chancellor Gordon Brown has set out to fund state school pupils at the same level as those in private schools.
His first step was to confirm extra capital funding over five years.
And there is £585m more to schools for the next two years to provide greater individual support especially for children in deprived areas.
Mr Brown said his "long-term aim" was that every child should have the sort of help already available to the 10% who were in private schooling.
The government had raised funding per pupil from £2,500 to £5,000, he said.
"But this figure of £5,000 per pupil still stands in marked contrast to average spending per pupil in the private sector of £8,000 a year," he said.
In private schools there was one teacher for every nine pupils compared with one teacher for every 16 in state secondary schools.
Among other measures, he announced more money to recruit an extra 3,000 secondary school science teachers.
For the first time there would be - as a "second chance" - free entitlement for everyone up to the age of 25 to get qualifications equivalent to A-levels.
The Association of Colleges warmly welcomed this.
"But the lack of information about how this new commitment is to be funded leaves uncertainty about the impact on other learners," it said.
In the past year, adult education courses have suffered because of the priority given to teenagers and those lacking basic skills.
Mr Brown said there would be adult learning grants to help with living costs.
There is £40m specifically to address the problems faced by low-skilled women, mainly for training and careers advice.
The Education Secretary, Ruth Kelly, said the "huge" new resource for schools would help to "revolutionise" classroom teaching, benefiting "thousands" of pupils.
It would allow her department to do more of the things that worked well such as small group tuition and one-to-one support.
Her Conservative shadow, David Willetts, said too many school leavers needed a second chance because of the failure to deliver a good education first time round.
"But why does the Chancellor have to attach strings to the money for schools?" he said.
"It would be better if head teachers were trusted to use their judgement on how the money could best help their pupils."
Further education colleges would be strengthened as centres of learning.
A government White Paper on the sector is expected shortly.
But he said courses would be restructured to focus resources on the best.
Their overall budget would be £7bn by 2008 in England.
Separate announcements would follow for the rest of the UK.
The Chancellor's "education budget" went down well with the National Union of Teachers.
"His commitment to increase investment in education is precisely the boost schools need," said the general secretary, Steve Sinnott.
"By targeting high class sizes and the invidious gap between state and private school spending he has shown that he understands the needs of school communities.
"It is exactly the kind of vision we want from this government."