The 11-plus transfer test and academic selection in Northern Ireland are to be abolished.
The last 11-plus transfer test will be in 2008
Education Minister Jane Kennedy made the announcement on Monday at Stormont following consideration of the Costello Group's report.
The government-appointed working body was set up to suggest alternatives to the current transfer tests which determine, at age 11, whether a child will go to a grammar or
The group has set a lengthy timescale. The last 11-plus transfer test will be in 2008. Pupils currently in Primary 2 will be the last to do it.
Ms Kennedy met former Education Minister Martin McGuinness and representatives of the political parties to discuss the decision to change the system.
She said the current transfer arrangements had significant weaknesses and there were inequalities of access for pupils.
"This new development will essentially be a passport to learning for each pupil," she said.
"It will entitle them to access to a minimum number and range of courses, including for the first time, a choice of vocational courses, regardless of the school they attend or where they live.
The minister said academic selection would end and new transfer arrangements would be based on parental choice, informed by pupil profile and better information about options.
BBC Northern Ireland's education correspondent, Maggie Taggart, said the Costello group was unanimous in its recommendation to abolish academic selection as well as the unpopular 11-plus transfer test.
Welcoming the news, SDLP education spokesman Dominic Bradley said: "This is what the SDLP has been fighting for 30 years - an education system that retains Northern Ireland's excellent standards, but that opens up the door to excellence, to all students, irrespective of their social class," he said.
But Ulster Unionist Assembly education spokesman Danny Kennedy said he had a number of concerns over the government's plans.
"Ulster Unionists are clearly alarmed that the minister is proceeding against the wishes of the people in making her decision at this stage and believe it is seriously flawed."
The former education minister, Sinn Fein's Martin McGuinness, has welcomed the decision.
"A system which designates any 11-year-old child a failure is fundamentally flawed and must be replaced," Mr McGuinness said.
But the DUP's Sammy Wilson said when people think about the implications of the move they will realise a more unfair system will replace the 11-plus.
The Northern Ireland Council for Integrated Education (NICIE) welcomed the publication of the Costello Group's report.
NICIE Chief Executive Officer Michael Wardlow said: "We are looking at a new and exciting educational landscape where the future of our children move to the central focus."
In the run-up to the announcement, MORI/MRC carried out an in-depth opinion poll on what people think about the exam for BBC Newsline.
The BBC Northern Ireland's education correspondent said most of the 1,000 people surveyed wanted to keep selection for grammar schools.
Last 11-plus transfer test will be in 2008
Current Primary 2 Pupils will be the last to sit it
Children 11-14 will study a broad and balanced curriculum
At 14 the main decision about courses will be made
Parents can opt immediately not to enter children for the test
Grammar schools can opt not to use the test for admission
Parents and pupils will identify the schools to attend in their local area
School choice decision will be informed by a pupil profile
Schools will offer courses under an Entitlement Framework system
All schools will provide a sound general education up to the age 14
Schools will offer students at 14 at least 24 courses
A third of courses must be academic and one third vocational
However, the majority thought that major decisions on a child's future should be delayed until children are older.
Of those questioned, the survey found that 56% thought that the current system was generally fair but that the 11-plus should be abolished.
But a majority of teachers - 53% - said it was not fair.
According to the survey, the area people live in has an effect on the answers they give.
People in Fermanagh were most opposed to the current system.
A majority 63% said doing the test was not a positive experience whereas in Antrim, only 42% felt the same.
When asked if the 11-plus was fair, 42% of people in Fermanagh said it was, but, in Antrim, 62% of respondents felt it was a fair system.
Former education minister Martin McGuinness had moved to abolish the current secondary level education selection system hours before he left office in October 2002.
The Sinn Fein MP said the final 11-plus tests should be in 2004.
Ms Kennedy, who assumed the education portfolio when the Northern Ireland Assembly collapsed in October 2002, had said she intended to follow the course of action set out by Mr McGuinness.