Ministers may have arrived at an uneasy acceptance that there is to be a hierarchy of state schools.

The Education Bill will afford special treatment to the former grant-maintained sector, but the threatened upheaval involved in offering all governing bodies the opportunity to choose which of three new categories of schools they want to belong to has been avoided.

In response to the hostility from local education authorities to the original plans, ministers have decided that only GM schools will be allowed to choose from the three categories.

It is envisaged that in 12 months’ time GM schools will have to opt to become either community, foundation or voluntary (church) schools. Where parents are unhappy at decisions taken by governing bodies, they can petition for a ballot.

For the rest of the system, schools will be informed that they are either community or voluntary, and they will have to stay in that category for at least a year. Eventually - no period is specified in the Bill (ministers are suggesting 12 months after the Bill becomes law) - schools that wish to move to foundation status can publish statutory proposals.

However, the extent to which there is to be a privileged school sector cannot be judged until two documents appear. The code of practice setting out the rules by which pupils are to be admitted to schools will not be published until next year. Unlike community schools, those that choose foundation status will be able to set their own admission policies. They will, however, have to abide by the code.

Also not yet available is information on the rules that will govern the way LEAs allocate budgets to schools. The argument being put by GM schools (two-thirds of the 1,030 GM schools are expected to become foundation) is that funding should reflect the extra costs incurred by foundation schools, because they own their own buildings and directly employ their staff.

In their attempt to introduce greater fairness into the system for allocating places in oversubscribed schools, ministers have placed their faith in local adjudicators to hold the ring between competing interests. LEAs will be asked to set up local forums that will be consulted on admissions policies. Any governing body that objects to the way another school in the area selects its pupils can appeal to an adjudicator.

It is by this means that ministers expect to bring an end to the partial selection (up to 50 per cent in some cases) that currently exists in the GM sector.

In public, ministers have been protesting that school structure is not relevant in the crusade to drive up standards. However, the competition for the more able pupils will only intensify, as the Government requires schools to set targets and provides comparisons of results from similar institutions.

The Bill sets out the degree to which central government intends to impose directions on the system. The Education Secretary David Blunkett is looking for powers to direct local authorities to close schools; powers to direct officials in local authorities that are deemed to be failing; and even the power to regulate the employment of clerks to governing bodies.

However, the new Bill does restore to LEAs a central part in the drama. Once it becomes law, they will have a statutory duty to raise standards in schools - and that includes foundation schools.