Local authorities will be responsible for ensuring young people can access the full "menu" of qualifications when the education leaving age rises to 18.
The government has transferred the £7 billion responsibility for post-16 education to local authorities, in a move that will see the closure of the Learning and Skills Council (LSC) in 2010.
A smaller £4 billion agency will also take on some of the LSC's functions to provide training and skills for adults.
The move will mean local authorities are responsible for commissioning the provision for all young people to study a choice of GCSEs and A levels, diplomas and - from 2013 - apprenticeships.
The plans were outlined by education secretary Ed Balls, as the government put its Raising Expectations white paper out to consultation.
Mr Balls said Labour was committed to "revolutionising" the education system, with the school leaving age set to rise to 18 by 2015.
"We want every 16 and 17-year old in the country to stay on in education or training so that they get a better job, have the chance to earn more and can make the most of their talents," he said.
Mr Balls said local authorities would play a "key role" in making this happen, arguing they are best placed to meet the needs of young people locally.
Skills secretary John Denham argued the smaller skills agency would be able to perform the functions of the £10.4 billion LSC.
"We want every adult to have the opportunity to improve their skills to get a job or progress in work and to help them realise their own aspirations and talents," he said.
"The proposals in today's consultation paper will help us to build on the great success of the LSC who are currently taking forward the skills agenda."