GCSEs could be scrapped and new, more rigorous O-levels brought back in the most radical overhaul of the school exams system for 30 years.
Leaked documents suggest that Education Secretary Michael Gove is set to abolish the national curriculum in English secondary schools.
The new examinations would "meet or exceed the highest standards in the world for that age group", according to Sky sources.
Mr Gove appeared in the House of Commons today to answer urgent opposition questions on the issue.
He criticised the current exams system and said it needs to be improved, but did not confirm whether O-levels are likely to be re-introduced.
"We need to ensure that our young people have qualifications which are every bit as rigorous and every bit as stretching (as other countries).
"Every objective academic study of what has happened in our education system has drawn attention to the weakness of our qualifications.
"We've already made GCSEs more rigorous by ending the resit culture, ending modules, and restoring marks for spelling, punctuation and grammar.
"Children are working harder than ever, but we've been told the exam system isn't working for them."
But shadow schools minister Kevin Brennan disagreed.
He said: "Ministers are in favour of going back to the future. They believe that Victorian-style rote learning is the way to teach our children.
"How will a return to 1950s qualifications help prepare young people for a 21st century world of work?"
Any move to scrap GCSEs will set Mr Gove on a collision course with both the teaching unions and the Conservatives' Liberal Democrat partners in the coalition.
Privately, senior Lib Dems have expressed fury over the proposals, according to the Press Association.
"What is reported looks like a huge upheaval for very modest gains," a source is reported to have said.
According to the leaked documents, pupils would begin studying for "explicitly harder" O-levels - covering traditional academic subjects such as English, maths, history, modern languages and the sciences - from September 2014.
Pupils would sit the new O-levels from 2016, with papers set by a single examination board to provide a single "gold standard" test across the country.
"Those starting GCSEs in 2013 are the last pupils who will have to do them," one document states.
Less able pupils would sit simpler examinations similar to the old CSEs. They would include simpler tests in English and maths in order to provide them with "worthwhile" qualifications.
Speaking on Sky News, author Michael Rosen said: "It's saying to children at round about the age of 12 or 13 - 'you are the low lot'."
But Toby Young, who runs a free school in London, responded by saying Britain had "plummeted" in the worldwide education rankings, and said something had to be done.
Takako Yung, from the National Education Trust, said most would agree that GCSEs need to be improved. But she warned against the return of a formal two-tier system of O-levels and CSEs.
"We would hope that all students are able to do well from education."
In order to encourage schools to adopt the new exam, the requirement that pupils should seek to obtain five good GCSEs graded A* to C would be abolished, leaving them free to take the new O-levels.
Mr Gove is said to want to reverse a "historic mistake" by the Tories in the 1980s when he believes the creation of GCSEs led to a collapse in academic standards through grade inflation and a proliferation of 'Mickey Mouse' courses.
The changes would see a return to individual examinations in physics, chemistry and biology instead of a single, combined science qualification.
Maths students would be expected to study complex subjects like calculus in order to get the top A grades, while English literature students would have to write longer essays and would not be allowed to take set texts into the exam room.
Mr Gove is said to be preparing to announce his plans formally in the next two weeks before launching a 12-week consultation. None of the changes require legislation.
Christine Blower, general secretary of the National Union of Teachers, (NUT)
said: "Michael Gove's continual criticism of GCSEs as a 'dumbed down' examination is not only incorrect but also very offensive to those pupils and teachers who achieve great results every year."