Mrs Shephard's announcement, which aims to placate teachers at the beginning of the unions' Easter conference season, is likely to alarm right-wing Tories who will see it as an attack on A-levels.
The review will seek to broaden A-levels by persuading more students to take up science subjectsmore closely related to vocational qualifications.
Mrs Shephard will tell secondary school head teachers that the review will not alter the standard and status of A-level. But teachers will hope to convince Sir Ron Dearing, the Government's chief exams adviser who will conduct the review, that fundamental reform of the exam is needed.
Ministers havedefended the A-level "gold standard"against a consensus among teachers, industrialists and academics that the exam is too narrow and ill-suited to many pupils.
Mrs Shephard's controversial decision comes at a time when she isbattling with Kenneth Clarke, Chancellor of the Exchequer, and right-wing Cabinet membersovercuts in school budgets and nursery vouchers.
Last week she brought the fight over nursery vouchers into the open, declaringthat shedid not believe they would work.
Mrs Shephard will make it clear at the Secondary Heads Association annual conference at Warwick that thereview will include GNVQs, the new vocational sixth form courses, and the A/S-level exam introduced two years ago to broaden sixth-form studies, but which has proved unpopular with schools.
Thereview will examine proposals for a new exam to allow pupils to take a wider range of subjects after one year in the sixth form.
Its purpose is partly to examine ways of fulfilling the Prime Minister's aim of securing parity of esteem for vocational and academic courses.
Sir Ron and his officials at the School Curriculum and Assessment Authority are already talking to examination boards about the new exam for which students could take up to five subjects.
Mrs Shephard also wants the review to address the shortage of applicants to higher education in the "difficult" subjects of maths and science. One aim of the new exam would be to ensure that pupils took a mixture of arts and science courses.Reuse content