Teachers accused George Osborne today of tearing up their pay agreements amid the government's "ongoing war" on the professsion.
The Chancellor confirmed that teachers' pay will be linked to performance in the classroom and that from next September school staff will no longer receive automatic pay rises each year.
Instead schools will be allowed to decide on salary levels for teachers, who will get annual appraisals.
The plans have been put forward by the School Teachers Review Body (STRB).
Mr Osborne said in his Autumn Statement: "The STRB does recommend much greater freedom to individual schools to set pay in line with performance.
"And my right honourable friend the Education Secretary will set out how this will be implemented."
The proposals cover pay for classroom teachers in England and Wales but do not include head teachers and deputy or assistant heads.
Teaching unions have previously vowed to resist any attempt to remove national pay structures, arguing that such a move would cut salaries and leave some schools, especially those in deprived areas, struggling to recruit top staff.
National Union of Teachers general secretary Christine Blower said: "With the profession under such continual attack and criticism, the mandatory national pay scales are one of the few things that have kept the profession attractive.
"This decision comes in the same week as government figures showing that the number of teachers leaving English state schools rose by almost a fifth in one year.
"It is children who will suffer when the profession is unable to recruit and retain teachers."
NASUWT leader Chris Keates said: "The war on teachers waged by the coalition government continues."
She hinted that the independent STRB may have been "leant on" as other pay review bodies have recognised the value of a national framework.
"These proposals place virtually unlimited discretion on teachers' pay in the hands of head teachers at a time when unfairness and discrimination are already rife."
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