The long-awaited interim report on the future of England's exam system has recommended a four-tier diploma to replace GCSEs and A levels.

The study, conducted by Mike Tomlinson, followed last year's controversy over A Level results. An earlier report by the former Ofsted chief inspector led to 1200 grades being revised.

His findings contributed to the resignation of then-education secretary Estelle Morris. Under the plans outlined in Wednesday's report, the overall levels of external assessment would be reduced.

An entry level diploma would be taken at 14, equivalent to the Key Stage three tests taken at present in English and Maths.

At 16, students would take a foundation level diploma similar to the grades D and E in existing GCSE exams, an intermediate exam would equate to grades A* to C, while students would sit papers for an advanced diploma, equivalent to an A level, at 18.

The full diploma would require studying English, Maths and Information Technology throughout the school career, but more vocational subjects would also be made available, while voluntary and extra-curricular activities would also receive credit.

"We have a very strong tradition in this country of post-16 having almost a free choice," said Tomlinson.

"There is a strong argument for saying that if that freedom of choice results in young people embarking on their specialist study and in doing so lacking the necessary underpinning general education and skills to achieve it, then it's in the best interests of the young person that that choice is slightly restricted."

The final report is due next Summer. The Department for Education and Skills has refuted press reports that the changes could be implemented within the next three years.

"There is no question at all of rushing in any long-term reform but it is important that we do look carefully at what long term reforms there could be within what the Mike Tomlinson group is working on," a spokeswoman said.

The changes have the support of the Liberal Democrats. "The report is a useful starting point but I suspect real change is a decade away!" said education spokesman Phil Willis."Few would disagree with the premise that our current system leaves 50 per cent of young people feeling failures at 16 and that there is an over emphasis on passing tests rather than learning.

"However the proposals do not make clear how assessment would take place, how quality can be guaranteed, and what students would receive if leaving the system before 19.

"There is little evidence of how different components would be valued or whether students would fail to achieve a level by not achieving the standard in a component.

"Little consideration has been given to the small or rural school setting. At present such schools find it increasingly difficult to offer breadth and the new system would be near impossible to deliver.

"The greatest challenge that has been totally ducked is the involvement of employers. Increasingly from 14 young people need to be exposed to the world of work and if vocational study is to become a reality delivering parts of the curriculum in the workplace is essential."

The National Union of Teachers called on the government to learn from the past before embarking on the educational reforms.

"Examination reform is a high risk business. It can go badly wrong as the past has shown. The fact remains that young people face a battery of examinations and tests. That must be reformed," said general secretary Doug McAvoy.

"The principles Mike Tomlinson has outlined are positive but the last thing young people and teachers need is imposed, under-financed and rushed change.

"The government must learn from history. The debacle which ensued when the previous government introduced the new GCSE exam must not be repeated."

But the recommendations were welcomed by the National Association of Teachers in Further and Higher Education.

"We have long argued for greater parity between academic and vocational routes - so this is a positive step.

"Giving students a ladder of qualifications and achievements will be a real motivator and encourage thousands of students who traditionally under-achieve," said general secretary Paul Mackney.

"We expect much of the 14 to 19 reform to be delivered in colleges, and we hope that Mr Tomlinson recognises that there's not a level playing field in funding between colleges and schools."