Education secretary Nicky Morgan has denied making plans to introduce compulsory setting based on ability in secondary schools.
The Guardian newspaper reported that the education secretary would call for pupils to be segregated according to their abilities and would call on Ofsted to back the measure.
However, Ms Morgan told MPs there was "absolutely no truth" in the rumours, which had drawn criticism from teachers' unions.
The prime minister has previously made statements in support of setting, claiming back in 2006 that it works and pledging to put pressure on the then government to introduce the measure.
Although some schools use the system, many teachers oppose it, believing it can harm the prospects of those from disadvantaged backgrounds.
Dr Mary Bousted, general secretary of the Association of Teachers and Lecturers, said: "The evidence is overwhelming that this practice holds back poor children, denying them access to an appropriately demanding curriculum."
Posted by Charlotte Michaels