Mr Green says the scheme will revolutionise the education system

Under a voucher-style system, parents would be able to "spend" the amount allocated for each child on the school of their choice.

Shadow Education Secretary Damian Green said his party would pilot the "better schools passport" scheme in London, Birmingham, Leeds, Sheffield, Manchester and Liverpool.

Mr Green estimates the policy would cost up to �400m a year in those areas.

The money would come from existing spending on schools, the Conservatives plan.

Parental choice is an illusion John Bangs, NUT

Charities, community groups, not-for-profit and profit-making companies and parents' groups would be able to set up new schools - or provide new management to existing ones - and receive funding through the better schools passport for the pupils that they attract.

By providing access to new schools as well as existing independent and state schools, the "better schools passport" scheme would provide "a level of quality and diversity that is presently only available to a few", the party said.

"Fee paying schools will not be allowed to ask parents to top up the passport. But if schools choose to subsidise pupils themselves, they will be allowed to do so."

In other words the passport could not be used in part-payment of fees at the more expensive schools.

But the Conservatives say there are plenty of schools - and could be many more - working on a charitable basis which could operate within the �5,500 a year they say should be available for a secondary school place.

Mr Green told delegates at the Conservative Party conference in Blackpool that the idea would revolutionise the school system.

"It will offer a radical extension of school choice. It will allow all children to aspire to an excellent education," Mr Green said.

He also said his party would defend the remaining 164 grammar schools in England.

Student fees

Mr Green said the first thing a Conservative government would do would be to legislate to scrap all university tuition fees.

The principle would be the ability to learn not the ability to pay.

University admissions should be based on academic merit not "social engineering and political meddling" such as discriminating against pupils from top schools.

"What kind of bitter, twisted world do Labour politicians live in when they try to penalise children for getting into a good school?" he said.

And for those who did go to university, a degree would be "a meaningful and a useful qualification".

'Divisive'

The National Union of Teachers said the "passport" system would "bring chaos and bureaucracy not choice".

Head of education at the NUT, John Bangs, said vouchers had proven bitterly divisive in the United States.

"They have damaged successful schools. Parental choice is an illusion and the organisation of effective education has been undermined," said Mr Bangs.

The Independent Schools Council, which represents nearly 1,300 independent schools, said the scheme could offer "rich new opportunities".

"This is a major break with the old assisted places policy, which was confined to certain academically gifted children," the council said.

"It would represent the first stage of an entirely new approach by the state to independent schools which would make them accessible to families who at the moment cannot secure places at them."

But the leader of the Secondary Heads Association, John Dunford, said there were many better ways of spending the �400m.

"Schemes such as this are based on the false assumption that independent schools, per se, are better than state schools.

"This is manifestly not the case and governments of all political persuasions should invest in the state system that they lead."