Local governments should be given greater freedom to run schools in the 21st century, such as discretion in setting up smaller classes, an advisory panel to the education minister said in its final report Monday.

The Central Council for Education, reporting to Education Minister Akito Arima, targets class size, zoning rules, the selection and authority of principals and other issues as areas needing change.

The report effectively indicates the direction the nation's educational system will take as it enters the 21st century. Some experts have blamed large classes for increasing the alienation between students and teachers, saying large numbers make it more difficult for students to develop personal ties.