Politicians and teaching unions welcomed news that the contract with the company at the centre of this summer's national tests debacle has been severed.

The Qualifications and Curriculum Authority (QCA) has dissolved its five-year £156 million contract with ETS Europe by "mutual consent".

The move follows the marking fiasco which saw delivery of national curriculum tests delayed, and questions raised about the quality of the marking.

ETS is to pay back £19.5 million to the QCA plus £4.6m for the cancellation of invoices and other charges. They will receive no further payments. The total contract for the 2008 tests was worth £39.6 million, which means more than two thirds of the money has been recouped.

ETS will continue to return scripts to schools and publish outstanding results, while the National Assessment Agency (NAA) takes control of the appeals process.

Dr John Dunford, general secretary of the Association of School and College Leaders, said it was "welcome news."

Chris Keates, general secretary of the NASUWT teachers' union, said it was inevitable that the contract would be terminated. She said: "It is good news for taxpayers that this is being done, apparently without any additional cost to the public purse."

Shadow children's secretary Michael Gove said the announcement was long overdue.

QCA chief executive Ken Boston said ETS were selected due to the "strength of their worldwide experience in delivering large scale assessments". He said: "It is disappointing that the issues with this year's national curriculum test results have meant that the partnership between QCA and ETS Europe must end early."

Zoubir Yazid, managing director ETS Global BV, said: "ETS Europe has apologised to schools for the delays in marking national curriculum assessments in England. As a subsidiary of a global, non-profit company, we are dedicated to assuring quality and equity for all pupils, and we are sorry that the results this summer were delayed for some schools."

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