The new Act also meant that the Board of National Education and the Denominational School Board consolidated into a single Council of Education.

Under this new setup, the Council of Education exercised more control over denominational schools than previously. Schools had to meet certain conditions relating to size, subject courses, and distance from existing government schools to receive government subsidies.

Provisional and half-time schools

The 1866 Act sought to distribute schools more widely across the colony by lowering the number of pupils required for a public school to operate (all national schools were renamed public schools in January 1867) from 30 to 25 pupils. The Act also established two new types of schools:

1. the provisional school was established by the Council of Education in places where attendance was likely to be between 15 and 25.
2. half-time schools were schools under the charge of a travelling teacher, where teachers managed two teaching stations in their circuit. Each school required at least 10 children to enrol before it could be established.

At provisional and half-time schools parents were expected to provide the site and necessary school buildings and furniture for students. However, if these schools grew sufficiently in enrolments they could be converted to a public school, when at which time the Council of Education would become responsible for most of the capital costs of new buildings or additions. It was not until 1875 did the government withdraw the requirement for local communities to provide at least one-third of the capital of a public school.

Growth under the 1866 Act

In 1867 the Council of Education inherited 259 schools, and by early 1880 the number had grown to over 1,100. The majority of these schools were public schools (684), but provisional schools (317) and half-time schools (107) had a significant influence in the more remote and regional areas.