President George W Bush has proposed a multibillion-dollar school-improvement plan to shift federal money to private schools when public education fails.
He added a last-minute provision in a gesture to Democrats opposed to school vouchers.
Under a voucher system, a parent can take federal money spent on their children to any school or education centre of their choice. Critics see public funding for private school tuitions as a threat to limited school resources.
In an Oval Office meeting with Democratic and Republican lawmakers, Mr Bush said there must be consequences "if children are trapped in schools that will not change".
But he included the new provision - suggested, he said, by a Democrat - that could help schools avoid the loss of federal money to private institutions.
"Both parties have been talking about education reform for quite a while," he declared. "It's time to come together."
Democrats objected to the school voucher proposal but embraced other portions of Mr Bush's package, including spending increases for reading and after-school care and a requirement that states must test students every year from grades three through eight in reading and maths.
"I can't emphasise enough the other areas where the president was reaching out, I think, in education policy, where there's a very broad agreement and meaningful agreement and the basics for a very important legislative initiative," said Senator Edward Kennedy, a Massachusetts Democrat.
Mr Bush, still enjoying a political honeymoon after a bitterly fought campaign, hopes to use the broad popularity of the idea of education reform as a bridge to Democrats - a way to make good on his promise to bring civility and bipartisanship to Washington.
He included Democrats in two separate White House meetings on education Tuesday and twice singled out Democratic lawmakers for praise in public remarks.