Legislation allowing the establishment of charter schools passed its first reading in Parliament on Thursday afternoon.
Under the bill, the schools will be run by sponsors under contract to the government. They will receive state funding but not all teachers will have to be registered.
The sponsor will be free to decide what curriculum to use, and what employees' pay and conditions are.
Associate Education Minister John Banks told the House the new schools will help those students failing under the current system.
"These schools are a new way of delivering public education, " he said. "They will bring together the education, business and community sectors to provide new education opportunities for our young people."
Opposition MPs say the new model is a Trojan horse to privatise education and siphon money from the public purse.