Schools should be given cash incentives to take underperforming children, says Lib Dem education chief Sarah Teather.
Extra funds ought to depend on underachievement, Ms Teather says
Ms Teather told Lib Dem delegates more funds should be targeted at children who underachieve, rather than just focusing money on deprived areas.
The "pupil premium" could encourage good schools to take on challenging children rather than leaving them to go to "sink schools", she said.
She also called for national tests in primary schools to be scrapped.
Ms Teather used her speech to accuse ministers of failing those most in need of the opportunities from education.
She said: "We have to break the link between poverty and poor achievement at school.
"League tables have given schools an incentive to weed out the under privileged and under achieving.
"We could turn that around if schools knew they would get extra help to support the students who are struggling."
Ms Teather said the school funds the government targeted at deprived areas were not going where it was needed.
"We should target the money on the individual child and we should look at how that child is actually doing in school, not where they live."
But she also called for an end to national testing at primary school level.
Ministers could not convince the public that education standards were going up because they did not know.
Instead of tests for all children, there should be a "sampling system" where a small group of students picked at random sat the same test each year.
"Once we have established a sampling system, teachers would then be free to set and mark their own assessment tests for their own class to tell them how their own students are doing.
"Then finally we would have assessment for learning, not assessment for targets."
'Every child counts'
A spokesman for the Department of Education and Skills said key stage tests were "non-negotiable".
"They provide valuable objective evidence in the core subjects helping inform further improvements to teaching and learning," he said.
"This is an important part of our drive to raise standards in the basics even further in primary schools."
The spokesman said the government had listened to concerns and changed the way the tests were done to make teacher assessment the deciding factor.
"We have no plans to introduce representative cohort sampling," said the spokesman. "Our belief is that every child counts and that every child should be tested."
The spokesman also rejected Ms Teather's attack on education standards.
"Excellent standards of teaching, radical reform and record levels of investment have gone hand in hand to deliver 5,800 more good or excellent primary and secondary schools today than in 1997, record test and examination results, and fewer failing schools," he said.