Conservative leader David Cameron has attacked the "pupil referral units" used to teach disruptive youngsters as expensive and ineffective.
David Cameron says schools lack support over behaviour
In a speech on classroom discipline, he called for schools to be able to use voluntary sector behaviour projects.
Mr Cameron also repeated calls to stop appeals over exclusions, which could overturn head teachers' decisions.
In response, the government says stopping appeals would turn disputes into expensive courtroom cases.
And it says that in practice, only 1.4% of permanently excluded pupils are returned to their school on appeal.
Mr Cameron, in a speech to the Policy Exchange think tank, outlined Conservative policy on how to reduce classroom disorder.
Criticising pupil referral units used by schools for rowdy pupils, he called instead for more funding for independent and voluntary sector behaviour projects.
These schemes, aimed at "turning around" troubled teenagers, could be more effective than pupil referral units, which he said failed to provide children with the intervention that they needed.
"It's time for the state sector to say that when it comes to these children, we're doing a bad job and you're doing a great job," said Mr Cameron.
The £17,000 each year spent on a place in a pupil referral unit could be better directed towards successful independent sector projects, he suggested.
There are about 450 pupil referral units in England - teaching about 15,000 children per year - providing an education for those pupils who have been removed from mainstream classrooms.
"They're intervening too late and in the wrong way. They're not giving heads the powers they need to control their own school. They're marginalising the voluntary sector," said Mr Cameron.
"And then they're surprised when we have too many children out of control, bullying and being bullied, committing crime and joining the conveyor belt that leads from ASBO to YOI to HMP."
"Schools should be places where teachers teach and children learn - not holding centres for kids no matter how badly they behave."
Mr Cameron reiterated his party's longstanding support for enforceable home-school contracts, setting out standards of behaviour, that would have to be signed by parents as a condition of entry to a school.
And he repeated calls for a change in the appeals system for exclusions, which allows families to challenge the decision of head teachers to remove pupils from a school.
Mr Cameron also warned that parents could "undermine" teachers by taking the side of the children who have behaved badly.
"Teachers often say to me that they set clear rules, enforce them - and then the parents take the side of the child. This completely undermines the authority of the school and contributes directly to bad behaviour."
The threat of malicious allegations made against teachers was also raised by Mr Cameron, who argued that teachers should have "full anonymity until the case against them has been dealt with".
In response, the Department for Children, Schools and Families Minister, Kevin Brennan, said that most of Mr Cameron's points had already been addressed.
"We have given teachers the powers they need to be tough on discipline. From September, heads will be able to apply directly to courts for legally binding parenting orders which, if broken, can result in a fine of £1,000.
"Contrary to popular myth, only 1.4% of permanently excluded pupils are returned to their school on appeal.
"We are also taking action on malicious allegations and have issued guidance to schools on speeding up the investigation process, making it clear that teachers should not automatically be suspended following an allegation. Heads can of course punish pupils for making false allegations."