End of year SATs tests are to be replaced with teacher assessment and increased reporting to parents in the first three years of secondary school.
Parents will receive new school report cards, designed to provide parents with clear information about schools' performance.
But Balls stopped short of extending reforms to key stage two and described end of primary school SATs as "critically important".
Despite this he said single level tests could potentially replace the current Key Stage 2 model of testing.
He said: "These reforms will provide more regular and more comprehensive information to parents about their children's progress, support heads and teachers to make sure that every child can succeed, and strengthen our ability to hold all schools to account, as well as the public's ability to hold government to account."
Christine Blower, acting general secretary of the National Union of Teachers, claimed Balls' announcement amounts to an "admission that the current testing system has failed".
She said: "The marking disaster of this year's tests has clearly been the last straw. A mixture of incompetence and an endemic shortage of markers must surely have propelled Ed Balls to take the view that at least part of the testing system was unsustainable."
"Now I would like him to understand that the whole testing system needs fundamental change. I call on Ed Balls to suspend all primary school tests and commission a comprehensive and independent review of testing and assessment, and to include fully all school communities in that review."
Mick Brookes, general secretary of the National Association of Head Teachers (NAHT), described Balls' failure to scrap Key Stage 2 tests as a "missed opportunity" and claimed the move would "further enrage colleagues in the primary sector."
He said: "NAHT congratulates the Government for abolishing Key Stage 3 SATs, whilst still offering schools the opportunity to use the tests for internal teacher assessment accreditation. This is precisely the approach put forward by NAHT in early May. We remain concerned that changes to Key Stage 1 will lead to greater bureaucracy and therefore an increased workload for teachers and school leaders. We are also dismayed at the decision to keep the current test arrangements for KS2. If it is right to end the regime in KS1 and KS3 and all SATs in Scotland, Wales and Northern Ireland, surely the same logic applies to English children at KS2."
But Elizabeth Reid, chief executive of the Specialist Schools and Academies Trust claimed national tests at the end of primary school are necessary.
She said: "We welcome the government's response to the continuing debate on assessment. It provides a flexible framework that will allow greater personalisation and innovation in the classroom as well as retaining strong accountability. National tests at the end of primary and secondary education, along with the new proposed report cards, will provide parents, teachers and the public with the information they need to assess a school's performance."
A new expert group, made up of head teachers and education professionals, will advise the government on the details of the new arrangements. The group will also help shape the introduction of national-level sampling at Key Stage 3.
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