"It's because the school has been such a great success that we have decided the time is right to change the system. The new proposals will reach and benefit more youngsters," said Wilkinson, attending the school's annual caps day this afternoon.
"Lilleshall has taught us a lot, we could not have initiated the academy schemes without it acting as the pilot. The National School has done a great job but its sample of boys is too small."
Although the proposals need to be ratified by the FA, school officials have already accepted it will be closed in 1999.
Since it was established in 1984, the school has produced a steady stream of internationals at all levels including Sol Campbell, Andy Cole, Nicky Barmby and Ian Walker.
Recent graduate John Curtis excelled in last month's World Youth Cup in Malaysia, while classmate Michael Owen has already played in the Liverpool first team.
The school, which is being copied by associations from Germany and France, offers 16 scholarships a year and its pounds 500,000 annual budget is met by the FA.