Tony Blair's former teacher yesterday demanded a return to a state school system which selects children on their academic ability - and claimed ministers were already moving in this direction.

Sir Eric Anderson, who was also headmaster of Eton when Tory leader David Cameron was a boy, said the 1960's "permissive revolution" and political ideology since had produced failing state schools.

Without a return to selection, Britain will fall further behind economic rivals such as India and China, he said.

The brightest pupils will continue to be held back in comprehensive schools, while the less able are condemned to an "educational underclass" unless ministers act, he suggested. Sir Eric, Provost of Eton, told the Headmasters' and Headmistresses' Conference of elite independent schools the Prime Minister's flagship Education Bill was a missed opportunity.

"The one thing the Bill specifically outlaws - selection of pupils - is what could bring about real change for the better," he said. "Specialist selection, schools of choice, could give us a proper chance against the emerging powers. Nothing major can be done unless Government is prepared to consider selection and schools of choice."