A report published by the education select committee in July warned that too many children are being excluded and effectively abandoned in specialist provision.
Since 2013/14, there has been a 40 per cent increase in permanent exclusions across all schools. Among recommendations made by the committee was for government and Ofsted to incentivise schools to be more inclusive.
In its response the government has said that it is looking at ways to reward schools that are inclusive.
"We are considering issues around ‘pupil-mobility' and exploring options to incentivise inclusivity in school performance measures," states the government's response.
The government's response also concedes that the current system of measurements used by Ofsted, including the "progress 8" measure of children's progress, can create a perverse incentive for schools to exclude pupils.
"Progress 8 is designed to encourage schools to teach a broad and balanced curriculum, with a strong focus on an academic core that will support pupils to progress to further study and employment," states the government's response.
"We recognise, however, that no measure is perfect, and it can drive perverse incentives in the system in the absence of a counterbalance incentivising schools not to exclude pupils.
"This can be particularly true for schools with challenging intakes. This is why we are continuing to take action to improve school performance measures," it adds.
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Another recommendation made by the select committee was for the Department for Education to take more responsibility for tackling off-rolling, where schools encourage the home schooling of challenging pupils.
"The department cannot wash its hands of the issue, just as schools cannot wash their hands of their pupils," states the MPs' report.
The government has said that this issue will be looked at in its forthcoming response to its review of elective home education (EHE), which launched in April.
"This asked for evidence on issues connected with EHE, including the practice of off-rolling pupils whereby schools allegedly pressure parents to remove children from school," states the government's response.
It adds: "We are analysing the responses received and we will publish a response to the call for evidence in due course, setting out our conclusions on elective home education and related issues."
Off-rolling is among a number of issues being looked at as part of government's review into school exclusions, which launched in March and is being led by former children's minister Edward Timpson. The review's findings are due to be published early next year.
Education Secretary Damian Hinds said this week that he would not rule out legislation to ensure schools are more accountable for permanently excluded children and their alternative provision placements.
"Permanently excluding a child from mainstream school should only ever be a last resort," he said.
"We support teachers in making these difficult decisions where they are justified, as poor behaviour does have an impact on other children in the class.
"We have an ongoing externally-led review of school exclusions but I want to be clear that holding schools to account for the pupils they place in alternative provision and permanently exclude is not off the table.
"But being excluded should never be at the cost of a child's education. No matter the obstacles they may face or the backgrounds they're from, we want our young people to receive an education that fosters ambition and a confidence in their abilities."
Hinds added that he wanted to improve the quality of education in alternative provision.
Latest figures, for 2016/17, show that only 4.5 per cent of children in alternative provision achieved a pass in English and maths GCSE.
"We need to be just as ambitious for pupils in alternative provision as we are for those in mainstream schools - with high-quality teaching and education, so parents can feel reassured and positive about their child's future, despite the difficulties they may have faced," he said.