The Prime Minister has thrown his support behind what he's described as a blueprint to lift Australia's lagging educational performance, laid out in a report by businessman David Gonski.

Key points: Malcolm Turnbull urges state governments, teachers and parents to back David Gonski's report

Malcolm Turnbull urges state governments, teachers and parents to back David Gonski's report Report says too many Australian children failing to reach potential at school because of restrictive nature of year-level progression

Report says too many Australian children failing to reach potential at school because of restrictive nature of year-level progression Federal Government has agreed to implement all of report's recommendations

Malcolm Turnbull has urged state governments, teachers and parents to back the recommendations in Mr Gonski's report on achieving excellence in Australian schools.

Mr Gonski's second major review into Australian education said the country must urgently modernise its industrial-era model of school education and move towards individualised learning for all students.

Too many Australian children are failing to reach their potential at school because of the restrictive nature of year-level progression, the report said.

It calls for the implementation across states of a new online assessment tool that teachers would use to diagnose the exact level of literacy and numeracy a child has achieved.

Teachers could then create individual learning plans for students that would not be tied to what year group they are in.

If formative online assessments were established and reported nationally, it would downgrade the intense focus on the yearly NAPLAN tests in favour of continuous, real-time measurement of student progress.

"We need to have more of the type of focused, personalised attention that David talks about," Mr Turnbull said.

"We need to make sure … our kids are coming out of school competitive. This is a very competitive world.

"We've got to make sure they've got the skills to excel and to compete and be their best."

The Federal Government has agreed to implement all of the report's recommendations, and it hopes to use it to develop a new national schooling agreement.

Education Minister Simon Birmingham said he would enter into talks with the states and territories about how to implement Mr Gonski's recommendations.

"We want to see a system out of this report where each student is stretched to the maximum of their capabilities each and every year over the 12 or 13 years of their schooling," Senator Birmingham said.

"It really is essential that teachers know and are able to chart where their students are up to in terms of what they're learning, how they're progressing and that parents are fully engaged as part of that process as well."

Mass education model holding back students

The report was commissioned by the Federal Government last year after the passage of its amended schools funding legislation.

Mr Gonski said in his report that the structure of Australian schools reflected "a 20th century aspiration to deliver mass education to all children".

The report recommended shifting from that industrial education model to one where schools focused on achieving each individual student's "maximum potential growth in learning each year".

David Gonski says Australian schools reflect a 20th century aspiration to deliver mass education to all children. ( AAP: Joel Carrett )

It found current assessment tools in schools did not provide teachers with "real-time or detailed data on a student's growth".

"We're advocating in this report that teachers should also, all the time, be upgrading their thinking and their ideas," Mr Gonski told reporters.

"I believe most teachers would agree with us, but the opportunity to do it, for example; how do you fit that in to your day, and so on?

"In our report we're suggesting: let's take some time to allow teachers to have more time to improve their art — and not to improve it because it's not good, but to keep up-to-date with all that's happening around the world and in their profession."

While tests like NAPLAN and the international sample test PISA provided "a useful big picture view of student learning trends across Australia and the world", they provided limited assistance to teachers at the classroom level, the report said.

It also said the current "rigidity of curriculum delivery, and assessment and reporting models" were holding Australia back.

Several state governments lodged submissions to the Gonski review, pointing out that current assessment tools used by teachers were not uniform across all schools.

The Victorian Education Department described current assessment tools in its state as "idiosyncratic".

Mixed-ability classes preferable

Many schools rely on gifted and talented programs to extend bright students but the report said evidence showed that mixed-ability classes were preferable.

It said streaming children by ability "has little effect in improving student outcomes and [has] profoundly negative equity effects".

It recommended overhauling the curriculum to focus on "learning progressions" that extended all students, regardless of ability.

Other key recommendations included:

Setting up a national inquiry to review curriculum and assessment in years 11 and 12

Setting up a national inquiry to review curriculum and assessment in years 11 and 12 Establishing a national educational research institute

Establishing a national educational research institute Implementing greater principal autonomy

Implementing greater principal autonomy Providing more rewards for high-performing teachers

Providing more rewards for high-performing teachers Overhauling the current A-E grading scale to instead measure progression gains

Overhauling the current A-E grading scale to instead measure progression gains Introducing a "unique student identifier" for all students that allows progress to be tracked across time, even if a student changes schools or moves interstate

A special meeting of the Education Council will be held on Friday to discuss the recommendations in the report, titled Through Growth to Achievement: Report of the Review to Achieve Educational Excellence in Australian Schools.

Mr Gonski was commissioned by the Gillard government in 2011 to compile a major report on school funding.

The review formed the basis for what is known as the Gonski legislation that created a baseline resourcing standard across all schooling sectors.

Findings 'not supported by research', 'lack detail'

But the report has not been welcomed by all in the sector, with the Centre for Independent Studies (CIS) describing it as a failure.

Senior research fellow at the CIS, Jennifer Buckingham, said the report offered no clear guidance to schools and did not meet the review's terms of reference.

"Many of the findings are not supported by research, and lack detail about implementation," Ms Buckingham said.

"For example, the disproportionate attention to policies that facilitate 'growth mindset' have no evidence-basis in terms of impact on student achievement.

"Likewise, the pre-occupation with increasing the focus on general capabilities has no support in rigorous research about curriculum design and how children learn."

The Australian Education Union said it was concerned the report was coming at a time when the Federal Government was cutting funds to public schools over the next two years.

Union president Correna Haythorpe said it was about properly resourcing disadvantaged schools and students.

"We do have outstanding teachers across Australia who are delivering a very high-quality curriculum, but the reality is that they are missing out on the resources needed to close the student achievement gap," she said.