Jeremy Corbyn said the schools inspectorate causes “absolutely enormous” levels of stress for staff and pupils.
Labour’s education spokeswoman, Angela Rayner, told the party’s gathering in Brighton that they would “immediately close the tax loopholes used by elite private schools and use that money to improve the lives of all children”.
She also pledged to task the Social Mobility Commission – which would be renamed the Social Justice Commission – with “integrating private schools” and “making the whole education system fairer”.
On Ofsted, the party plans to get rid of the body and replace it with a two-phase inspection system.
Regular “health checks” would be carried out by councils, with more in-depth inspections led by Her Majesty’s Inspectors (HMIs) – full-time, trained professionals.
The HMIs would look into any concerns that arise from council checks – or issues raised by parents, teachers and governors.
Mr Corbyn suggested the reforms would result in “a more frequent form of supportive investigation”.
But Education Secretary Gavin Williamson said Labour was “putting ideology before the education of our children”, while the Association of School and College Leaders (ASCL) said the announcement was a “complicated answer” to the issue.
Labour said the new system would make sure that parents get the “in-depth and reliable information that they need about our schools”, while reducing stress for teachers.
Mr Corbyn told the BBC’s Andrew Marr Show: “What we want is an education service that leaves no child behind and gets the best out of everyone.
“You don’t achieve the best by threatening people.
“We are losing almost as many teachers as we are recruiting every year because of the levels of stress they are under.”
Shadow education secretary Angela Rayner said: “Schools will no longer be reduced to a one-word grade or subjected to a system that hounds teachers from the classroom.
“A new system of peer review will deliver school improvement, led by the experts in our schools, who can achieve more working together for the common good.”
Mr Williamson said: “Parents will be rightly fearful of Corbyn’s plans to abolish independent inspections, scrap SATs and destroy academies and free schools.
“Labour would weaken discipline, lower standards and reduce choice and information for parents.”
Ofsted’s chief inspector Amanda Spielman said the organisation “has been standing up for the interests of children and parents for over a quarter of a century”.
She added: “This work must continue.
“So we’ll keep on raising standards in education through our new model of inspection and we’ll continue to keep the most vulnerable in society safe, through our regulation of children’s social care services across England.”
Dr Mary Bousted, joint general secretary of the National Education Union, praised Labour’s move.
“Ofsted has been a force for lowering school standards by driving teachers from the profession,” she said.
But Geoff Barton, general secretary of the ASCL, cautioned that the new system could mean more bureaucracy.