The Lord Chancellor has called for changes to the way adults are vetted for work in schools to stop false claims of child abuse blighting teachers' lives.
Lord Falconer warned that teachers' careers were being ruined by children who make up claims of mistreatment because allegations are routinely kept on file even if they turn out to be false.
Accused staff should be able to continue working and have the right to anonymity while disciplinary investigations are carried out, he said.
Speaking to the National Association of Head Teachers in Bournemouth, Lord Falconer said: "In most cases, where some form of disciplinary proceedings are going on, the name of the teacher should be kept anonymous. The teacher should not automatically be suspended.
"The process can be utterly ruinous for teachers and there are too many occasions where there is automatic knowledge in the community and automatic suspension."
Delegates at the NAHT's annual conference warned that even unproven allegations currently remain on teachers' files and show up in Criminal Records Bureau checks when they are applying for jobs.
Headteachers are also obliged to note such unproven allegations when writing references, the union said.
Lord Falconer stressed that this should not happen.
"In cases where it is absolutely clear that the allegation is false I see no purpose in forcing that to be included," he said. "It would have a consequence for the CRB. Where it is demonstrably the case that the allegation is false there should be greater discretion as to what the school record, which is then what goes to the CRB."
Lord Falconer criticised insurance companies who advise local authorities to pay compensation to litigious parents because it is cheaper than defending a false claim in the courts.
