Colour codes from red to green replace school banding
The school banding system for secondary schools in Wales is to be replaced by a new colour-coded rating system for both secondary and primary schools.
From January, the best performing schools will be rated green, followed by yellow, amber and red, for those needing "significant improvement".
Ministers say the system will use a wider range of data over three years, rather than just one.
Education Minister Huw Lewis believes it will help schools improve.
School banding was launched in December 2011, with secondary schools grouped into one of five bands annually.
It has been credited with helping to raise attendance levels but some schools have grown increasingly frustrated by the volatility of the system, which has seen schools leap from the lowest band 5, to the highest band 1, in a single year.
Teaching unions have branded the banding system a "failure" based on "arbitrary and misleading" figures.
The new system will use exam performance data in key subjects, as well as attendance levels.
An element of self-evaluation is also intended to bring in factors such as leadership and teacher assessments.
Initially the top 25% of schools will be in the green zone, but if all schools do well they could in theory all move up to that section.
Education Minister Huw Lewis said the aim was to improve on the current banding system, but denied it had failed.
He said it would be a "robust" system that would give reliable data about school performance.
Education union ATL Cymru said the Welsh government had "finally" realised a "far more intelligent accountability mechanism" for schools was needed.
The union's director, Dr Philip Dixon, said: "We are glad that the bonkers banding system has bitten the dust.
"It was quite clear that its crude labelling and laughable yo-yo effect had rendered banding unfit for purpose."
Plaid Cymru education spokesman Simon Thomas welcomed the new system as a "step in the right direction for higher standards" but said there was "still a need for improvement in measuring and raising education standards".