Mr Balls said there was no place for racism of any kind in schools
Schools Secretary Ed Balls has ordered a study into whether members of organisations which "promote racism" should be banned from being teachers.
He told the Labour conference he wanted to ensure there were sufficient "powers" available "to keep racism and BNP activity out of schools".
The study will be done by former chief inspector of schools Maurice Smith.
Earlier, British National Party leader Nick Griffin said his members were victims of "political oppression".
Mr Balls told delegates there was "no place for racism of any kind in our schools".
In a letter to Mr Smith, the minister asked for recommendations on whether existing safeguards were adequate "to maintain trust in the teaching profession and protect children and young people from indoctrination and discrimination".
The review should look particularly at "whether there is a case for affiliation to an organisation that promotes racism being grounds for barring from the profession", Mr Balls wrote.
"I have always believed that membership of any organisation that espouses racist views is fundamentally incompatible with the values and ethos of the teaching profession," he said.
Members of the BNP are already banned from serving in the police and prison services.
Mr Balls cited two referrals of teachers to the General Teaching Council for England for allegedly promoting racist beliefs.
He also highlighted the fact that a list of BNP members leaked last year showed 15 people had identified teaching as their profession.
"We cannot know how many more may have chosen not to reveal their profession," Mr Balls wrote.
Chris Keates, general secretary of teachers' union NASUWT, said her organisation had long campaigned to have BNP members banned from schools.
"Today's announcement is a major step forward towards that goal," she said.
"Previous secretaries of state have been sympathetic, but now we have a clear commitment to take action on this issue.
"All right-minded people understand that an agenda of hatred, bigotry and intolerance has no place in education."
Mr Griffin told BBC Radio One's Newsbeat that it was "absolutely wrong" that many of his party's members felt they had to hide their allegiance.
"It's terrible, isn't it? That we've got so much political oppression, so much unfairness in Britain," he said.
"That people who are members of a lawful political party are afraid that, if for instance, they're a policeman, they'll be sacked just for their political beliefs.
"But don't blame me for that. That's the fault of the main political parties and the mass media - the BBC included - who seem to think that it's OK to have a witch hunt against people who have different political views from themselves."
Lib Dem MP Evan Harris, a member of the Human Rights select committee, attacked Ed Balls' decision to set up a review.
He said: "Although well-intentioned, this misplaced, illiberal, and fundamentally counterproductive proposal will creates martyrs out of the BNP, and yet capture some teachers who have never mentioned politics at work.
"It will add nothing to the existing prohibition on workplace discrimination and harassment in schools, or to professional codes of practice.
"No form of bigotry has any place in the classroom - this will be a glib, clumsy, and partisan way to try and promote tolerance and mutual respect."
Mr Smith will deliver his report in January.