First Nations will get greater control of their education system and a significant boost in education funding as part of the government’s plan to retool the First Nations Education Act, CBC News has learned.

Prime Minister Stephen Harper will make an announcement in Alberta about the proposed legislation on Friday. The bill will also require teachers on reserves to acquire provincial certification and include measures to improve attendance records and low graduation rates on reserves.

The announcement will include the lifting of the two percent cap on increases to First Nations funding that has been in place since the 1990s, CBC News has learned. A 4.5 per cent annual "escalator" will replace it.

"This is a real governance and partnership agreement that will be transformative," said a government source familiar with the bill.

First Nations people and leaders have long-demanded greater control of their education systems.

Harper will be joined by Aboriginal Affairs Minister Bernard Valcourt as well as Assembly of First Nations National Chief Shawn Atleo and regional chiefs from across the country at Kainai High School on the Blood Tribe reserve north of Cardston, Alta.

The announcement will take place at 11 a.m. MT (1 p.m. ET). Harper will then have a banquet-style meal with the students and leaders of the Kainai Nation Blood Tribe after the announcement.

At its Special Chiefs' Assembly in December, the AFN passed a resolution that rejected the federal government's proposed First Nations education act, demanding long-term funding guarantees, First Nations control over education and a recognition of their languages and culture in curriculum.

But in an email to AFN regional chiefs this week, Atleo said that AFN had "received word" of the federal government's agreement to the conditions of that resolution, "including new and sustainable investments in the upcoming budget."

"This is a significant shift and I believe it results from our strong direction from chiefs to take all steps necessary to secure the future of First Nations children," Atleo said in the email.

Valcourt signalled the government's willingness to meet those conditions in a conciliatory open letter to the AFN in December, in response to an earlier letter from Atleo.

"The government of Canada agrees that First Nations must have control over their education," Valcourt wrote. "The proposal that I put forth is intended to empower those who know best what their children need — First Nations, parents, communities and administrators — to determine what is most effective for their success."

The federal government wants the act to be in place in time for the next school year in September.