A review by the Ministry of Education says the education system has been failing at-risk students by dumping them with the Correspondence School.
The school has a roll of about 27,000 students, many of whom have been expelled or don't fit in the mainstream system.
More than half the full-time students are identified as at risk of underachieving. The review says distance-learning is not the right approach for them.
The review proposes a new system where students would be matched with mentors at other schools, iwi or alternative education centres.
The Correspondence School is working with the ministry to run a pilot programme next year, in which mainstream schools, iwi and community groups would be more accountable for Correspondence School students.
Chief executive Mike Hollings said students who have struggled in mainstream schools find long-distance learning challenging.
He says students will achieve better results with additional, personalised support from their community..
Review terms of reference
The review into the future of the Correspondence School by the Ministry of Education was originally going to consider whether it should become a virtual charter school.
The terms of reference are clear it was going to consider the potential for the Correspondence School to become a charter school.
But the ministry said that never happened as policy details for charter schools were still being developed.