Peter Clark, the headmaster who was sent in to the Ridings school in Halifax, West Yorkshire, after inspectors said it was failing, is rewarded for his efforts by becoming a Commander of the British Empire.
He is one of 58 teachers or others connected with education honoured as part of the Prime Minister's election commitment to raise standards in education.
Next year's Honours List will reward doctors and nurses to coincide with the 50th anniversary of the National Health Service.
Knighthoods are awarded to three state school head teachers for their work in rescuing failing schools or raising standards: Leslie Hampton, head of Northicote School, Wolverhampton, becomes a knight; Patricia Collarbone, past head of Haggerston secondary school for girls in Hackney, and Tamsyn Imison, head of Hampstead School, Camden, become dames.
Sir Ron Dearing, chairman of the national committee of inquiry into higher education, is one of four new life peerages. The others are Sir Robin Butler, cabinet secretary; Paul Hamlyn, the publisher and Labour backer, and the Rt Rev David Sheppard, past bishop of Liverpool.
The prime minister's official spokesman joked about the list being dubbed the people's honours - "they are all people; there are no Martians in the list". But Mr Blair has been keen to ensure the continued support for the honours list system by rewarding more people for achievement in ordinary walks of life.
In addition to the knighthood for Elton John, the awards carry a special section for those involved in planning the funeral of Diana, Princess of Wales, including warrant officer Paul Cunliffe of the first battalion, Welsh Guards, one of the pallbearers. Sir Robert Fellowes, the Queen's private secretary is made a GCB.
Marking the peace process in Northern Ireland, Sir John Chilcot, the past permanent secretary at the Northern Ireland office, is made a GCB. Peter North, who reported on reforms to stop violence on Ulster marches, is made a knight, and David Trimble, the Ulster Unionist leader, is made a privy councillor to enable him to be briefed on intelligence secrets.
But casting the honours more widely, means fewer gongs for diplomats who expected them on "Buggins turn" in the past. Chris Patten, former Governor of Hong Kong, and Eric Hobsbawm, the historian, are made companions of honour. The campaigner against apartheid, Archbishop Trevor Huddleston, is awarded the KCMG.