Prime Minister Julia Gillard says giving more power to school principals to hire and fire teachers is necessary to stop education standards falling.
"This is the next step of reform, to empower local principals and local school communities to make the best decisions to drive quality in their school," Ms Gillard told reporters in the Queensland town of St George.
The system had already been tested, she said.
"We've particularly supported with federal money a trial in Western Australia in what are called independent public schools, state schools that have invested in their principal and their local community to lead and empower their school to make the changes they need to, to make it a better place."
Under the federal government's education reforms, school management boards would be given the power to fire underperforming teachers.
In a move that will break the long-standing deadlock about whether principals can hire and fire, school management would be given free rein on recruitment and management of teachers, News Ltd reported on Saturday.
Ms Gillard said Australia would not keep up with other countries in the region if reforms in education were not made.
"We're in an international race on education and the rest of our region is investing in their schools.
"That means four out of the five best performing school systems in the world are in the region in which we live."
Despite concerns by the Queensland Government, Ms Gillard said she would continue to work with all states and territories.
"If it (the reform agenda) is working and if more independence is driving better results then I think states will look at that and they'll want to adopt it," she said.
"But we're not trying to impose one model from above."
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