Teachers will be paid up to £70,000 a year if they are successful, according to David Cameron's favourite think tank.
Under Michael Gove's new performance-related pay system, the best performing teachers could be earning higher wages within a much quicker time frame.
Tory think tank Policy Exchange welcomed the shake-up, which came into force in September, saying it would attract more graduates to the profession and drive up standards.
But it warned the changes had to be transparent and "reward real excellence".
In its report, released on Friday, Policy Exchange notes that while pay in itself is not the primary motivator for the majority of teachers, those who perform best should be rewarded.
But it also recommends the system include an evaluation based on several measures, not just test or exam scores, which takes place over more than one year to reduce volatility in results and to allow staff to adjust to the new assessments.
Financial rewards should be based on increases in base salary, rather than through bonuses, and performance-related pay must be used as a real reward for excellence and not as a way of holding down the overall pay bill, it said.
According to the Department for Education, qualified teachers in maintained schools currently earn a minimum of £21,804, or £27,270 in inner London.
Senior teachers can make up to £57,520, or £64,677 in the capital, while head teachers can reach a salary of between £42,803 and £113,303.
Under a performance-related pay system, rather than a time-based system, top teachers would be able to earn as much as £70,000 a year without leaving the classroom within an estimated five to eight years.
A YouGov poll for the report found that 89% of teachers want to be paid based on the quality of their teaching.
A Department for Education spokesman said: "Our performance-related pay reforms are designed so that good teachers can be paid more.
"This report shows that 89% of teachers support this policy and highlights why paying good teachers more is so important."Suggest a correction