Education minister Maria Eagle said the curriculum needed revision
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The government has put off the final decision on whether to remove academic selection until after the autumn deadline for restoring devolution.
The draft Education Order which includes removing post-primary selection is now before parliament.
It still includes a ban on academic selection but delays its implementation until 25 November.
If the assembly is still not restored by the 24 November deadline then the ban on academic selection becomes law.
Education Minister Maria Eagle said assembly members could have the final decision on implementing the order.
BBC Northern Ireland education correspondent Maggie Taggart said the government's announcement would "come as a big shock to many and will partially please some".
Ms Eagle said the draft legislation was a blueprint for the creation of a world-class education system.
She said the current system was "failing too many children, and it is failing our economy".
"Northern Ireland urgently needs a revised schools curriculum that allows every child to meet their full potential, and one that creates the skills base needed to ensure Northern Ireland's economy doesn't get left behind," she said.
The government responded to other complaints about the draft order.
The Irish language will now have equal status with european languages.
Decisions on suspensions and expulsions will remain with the voluntary and Catholic schools and with the education and library boards.
It had been planned to give the power instead to a central body.
Northern Ireland Secretary Peter Hain said it was a "momentous day".
"I firmly believe that the ending of academic selection is vital in creating a world-class education system for Northern Ireland," he said.
"This Order will not only see an end to the 11-plus exam as a means of deciding a child's future, but will also end all forms of selection by academic ability."
DUP MP Sammy Wilson said the government had "recognised that it is unsustainable" to ban academic selection.
"It is disgraceful for the government to now attempt to play politics with the educational future of children in Northern Ireland by enforcing a deadline of 24 November," he said.
Sinn Fein assembly member Michael Ferguson accused the minister of "holding education reform to ransom".
He said: "Education reform should not be put on the long finger. Progress should not be determined by the willingness or otherwise of the DUP to grow up and take responsibility for the big issues affecting people in the north."
Gerry Beamish of the Confederation of Grammar Schools said the move was a "hypocritical attempt to pass the blame for a disastrous decision to local MLAs".
He said the government had "no qualms in using our children's educational future as blackmail to put pressure on political parties".
The first move to end the current system in Northern Ireland was made by assembly education minister Martin McGuinness hours before he left office in October 2002.
The last 11-plus transfer test is scheduled to be held in 2008.
Last December, the then-education minister Angela Smith said that by 2009, schools could take pupils based on a flexible "menu of criteria".