The American contractor hired to oversee this year's national curriculum tests will not be responsible for re-marking disputed papers.
England's schools exam agency, the National Assessment Agency (NAA), will take over the review process with immediate effect.
Markers who would have been reviewing papers for ETS will now be working for the NAA.
The announcement comes after the fiasco which saw the results of tests for 11 and 14-year-olds delayed, affecting more than a million schoolchildren.
Almost three weeks after the results were due to be published, more than 15% of 14-year-olds still do not have their English scores and 5% do not have maths or science. Some results for 11-year-olds are also still missing.
Headteachers have warned that the number of appeals this year is set to rocket, following continuing reports of problems with the quality of marking, scripts going missing and pupils being recorded as absent even though they took the tests.
In a statement today, the Qualifications and Curriculum Authority (QCA) said: "The National Assessment Agency (NAA) is to take over the management of the reviews process for this year's key stage tests with immediate effect.
"Schools that request reviews can be reassured that any material sent will be redirected to NAA.
"Individual markers who have been engaged by ETS for the review process will be contacted directly by the NAA within the next few days to make transitional arrangements."
The deadline for schools to appeal against results has now been moved back to September 10, or 10 days after the start of the school term.
Last week, ETS vice president Andy Latham acknowledged the company is expecting higher levels of appeals this year.
John Dunford, general secretary of the Association of School and College Leaders, has warned that there is likely to be a record number.
He said: "The results need to be accurate and schools will be much angrier at lack of accuracy than delay. Results will be scrutinised this year as never before and the number of appeals is almost certain to rocket."
Today's announcement will add fuel to the widespread speculation that ETS will face the sack following the debacle.
Schools Secretary Ed Balls said he has been assured that the quality of marking this year will be as good as in previous years.
He told ministers last week that he is unable to intervene in whatever happens next because of legal and financial issues.
Mr Balls said the contract is between ETS and the QCA and the tests are run at "arm's length" from ministers to ensure the system is independent.
An independent inquiry into the delays, led by Lord Sutherland, is due to report back in the autumn.Reuse content