Schools look set to be given more decision-making powers on the size of classes, numbers of teachers and how they spend their funding on teaching children with special needs.
In an overhaul of the way schools are run, Public Spending Minister Brendan Howlin wants to see decisions being taken locally "on the ground", rather than directed nationally.
In an interview with the Irish Independent, Mr Howlin says he wants to test a radical new model where spending decisions are taken "on the ground".
The minister said the school would be given a lump sum and told to spend it in a way that was best suited to its circumstances, rather than having to adhere strictly to regulations set down by the Department of Education.
"I think we should begin to pilot a block grant for schools and they determine how many frontline teachers they want, how many SNAs (Special Needs Assistants), how many resource teachers or what skills mix," he added.
It comes as the Department of Education confirmed that an official watchdog is being handed increased powers to deal with poorly performing teachers.
Changes to existing laws will allow the Teaching Council, which regulates the profession, to impose sanctions on teachers who are underperforming or found guilty of misconduct.
Education Minister Ruairi Quinn said the new powers would put teaching on a par with other regulated professions.
If Mr Howlin's pilot project works, then the funding model would be rolled out across the country.
Officials at the Department of Education are aware of the plan and expect serious consultations to take place in the coming months.
However, the idea has been criticised by the Irish National Teachers Organisation (INTO) which fears it will be difficult to make work.
"This will lead to more bureaucracy for schools and less transparency in the education system. The idea smacks of a failed policy championed by the Tory party in Britain and teachers will be shocked hearing such a proposal from a Labour minister," a spokesperson said.
The Department of Health and HSE is currently changing the funding model for major hospitals after carrying out a pilot project to test whether a payment per patient treatment would work.
Following five years of cutbacks, the Labour Party minister says the next step in public spending is to look at how services are delivered.
Mr Howlin says value for money has to be to the forefront, but current ways of doing business have to be challenged to "get a better service delivered in a more rational way".
The minister cites local government and education as examples of areas where there should be more devolved decision-making.
"I'd like, myself, to move towards a more devolved decision-making system.
"In schools, we have constant rows about the number of SNAs or resource teachers and so on, and people bid for everything because the Department of Education determines that centrally," he added.
The minister said decision around class sizes and teacher numbers would be among those to be taken by individual schools.
"At school level, to say, well actually, we will have more SNAs and fewer resource teachers or more resource teachers and fewer SNAs or this is the mix," he said.
"And teachers, yeah, I'd like to see that. We'll have two fewer teachers and. . .
"Well, I'd like to see that but I mean that's a big challenge and it will be a big challenge for school managers to take on that. But maybe it's something I'd like to see piloted," he added.
Mr Howlin said the grant would be determined by the size of the school, the number of children with special needs and the level of disadvantage in the area.
"You have to have a matrix obviously of saying: well, there's your block grant on the basis of your pupils, numbers and level of disability, or socio-economic background or DEIS or whatever else.
"But within that, to devolve more responsibility to make real decisions on the ground," he said.
"You'd reduce the block grant or you'd increase the block grant and decisions are made at ground level," he added.
Fionnan Sheahan Group Political Editor