Education in the area had been contracted out to Serco, under the name Education Bradford, following a damning Ofsted report in 2000.
But the council will take services back in house once Serco's contract ends in 2011.
Balls said Bradford Council should be congratulated for gaining widespread support from head teachers and for building a cross party consensus on plans for the future of local education.
He said: "I don't want there to be formal intervention in any local authority for any longer than is absolutely necessary and it will always be a last resort."
He added that Bradford must now turn its vision for school improvement into a set of clear priorities for raising attainment over the next five to 10 years.
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