The "monochrome" of traditional state education must be reformed to a new system where young people have the choice to study what is best for them, Tony Blair has said.
In a speech marking ten years since his famous "education, education, education" pledge, the prime minister stressed that reform must continue.
"The key to education today is to personalise learning, to recognise different children have different abilities and in different subjects," he argued.
He announced plans to double the number of city academies - privately-sponsored schools with the freedom to run their own affairs - to 400. And he pledged to create 100 new trust schools - which would also be semi-independent - by the end of the decade.
Mr Blair also promised that at least one school in every local authority area would offer the international baccalaureate (IB) by 2010. Alongside the new vocational diplomas, to be introduced from 2008, these would provide "real choices" for young people after 14.
Speaking to the Specialist Schools and Academies Trust conference, the prime minister accepted that "sometimes the pace of reform has been hard, even confusing". But he said education, as the "modern nation's infrastructure", had to keep up with the world.
"The next generation cannot afford the legacy that the last generation's education system left us - seven million adults who can't make the literacy grade of an 11-year-old. There is an urgency here that drives out complacency," he said.
Providing new ways of personalised learning was crucial to improving education, Mr Blair said, but warned that how schools were structured was also vital to ensure that strong school leaders, discipline and good life skills flourished.
"The vision is clear - a state sector that has independent, non feepaying schools which remain utterly true to the principle of educating all children, whatever their background or ability to the highest possible level but with the freedom to innovate and develop the way they want," the prime minister said.
He added: "Good education makes a difference. Good teaching changes lives. Educate a child well and you give them a chance. Educate them badly and they may never get a chance in the whole of their lives."
Earlier this week, the Conservatives warned of an "education apartheid" opening up in English schools, as more and more independent schools offered exams like the IB that were not widely available in the state sector.
Today shadow education secretary David Willetts welcomed Mr Blair's commitment to the IB but said he "should have been bolder" and also offered state school pupils the chance to study the international GCSE (IGCSE).
He also welcomed the drive to expand the city academy scheme, saying the prime minister's plans would be "safe with us", but added: "The rush to create so many suggests he is worried about whether they will be as safe with Gordon Brown."
However, Liberal Democrat education spokeswoman Sarah Teather said that instead of "cutting and pasting" the curriculum, it should be reformed to create a new system of diplomas, as the Tomlinson commission in 14-19 education proposed two years ago.
"This new announcement creates a confusing three-tier system with the IB for some, vocational diplomas for others and the status quo of GSCEs and A-levels for the rest," she said.