Principals and teachers fear they are headed down a path of privatisation by stealth, after Victoria signed a contentious deal to enhance Tony Abbott's push to create 1500 "independent public schools" by 2017.

Schools will get access to extra funds if they become more autonomous; parent-based councils could get new powers to select principals and acquire property; and administrative work in small schools will be increasingly outsourced as part of the $16 million agreement.

State schools face possible privatisation by stealth. Credit:Louie Douvis

The changes form part of the federal government's plan to entice at least one-quarter of Australian public schools to become more "independent" over the next three years.

Unlike Western Australia, where the idea was pioneered, Victorian schools opting into the program will not be rebadged as "independent public schools", but will still get access to the money if they adhere to targeted activities designed to make them self-govern and be more accountable for their results.