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Teenagers in Wales should continue to sit GCSEs as part of a revamped Baccalaureate, an independent report says.

The recommendation would increase differences with England, where new qualifications are planned.

The Welsh review also calls for more challenging GCSEs that test literacy and numeracy and the creation of a new body to set and regulate exams.

The review follows concern the exam system is currently too complex.

It heard concerns about the quality of GCSE students' abilities at reading, writing and maths.

The says some employers and universities do not think that a grade C at GCSE English, Welsh and maths is a reliable indicator of literacy and numeracy skills.

It calls for new GCSEs in English language and first language Welsh that put more emphasis on the quality and accuracy of students' writing and on the core skills of spelling, punctuation and grammar.

Its author, Huw Evans, former principal of Coleg Llandrillo, said he wanted to guarantee the "rigour" of qualifications and make sure they are recognised by employers and universities.

Some degree of "divergence" with England was unavoidable, he said.

GCSEs in core subjects at secondary schools in England are being replaced by a new English Baccalaureate which will be awarded on the basis of a single end-of-term exam.

The first will be sat in 2017 with other subjects possibly added later.

But Mr Evans said that "where appropriate" pupils in Wales should continue to do modular courses, picking up marks that count towards their final grades during the school year.

The review, which makes 42 recommendations, proposes "building on and strengthening the Welsh Baccalaureate" to provide an "overarching framework" for 14 to 19-year-olds.

The Welsh Bacc was introduced in 2002 to give teenagers a more rounded education. As well as core subjects such as maths and languages, students can also do work experience and voluntary placements.

Under the review's recommendations, 16-year-olds will be able to gain a national level Welsh Bacc if they obtain at least five GCSEs at grades A to C and the components of the baccalaureate.

An advanced Baccalaureate will continue to be available for A-level students.

It is also recommended that a new body called Qualifications Wales should be established at arms length from the Welsh government to regulate qualifications.

Although they would continue to set policy, ministers would lose responsibility for regulating the exams system.

The new organisation would eventually award most of the qualifications sat by teenagers in Wales.

Education Minister Leighton Andrews came under fire this summer when he ordered the WJEC board, which sets most of the GCSEs taken by Welsh pupils, to re-grade English exams.

Mr Andrews said he acted after a report by his officials found the way grade boundaries were set was unfair.

He has previously described GCSEs as a "very strong brand" and said the UK government's decision to replace them in England was a "backwards step".

Deputy minister for skills Jeff Cuthbert said: "The purpose of this review was to ensure that the qualifications available to learners in Wales are relevant, valued and understood, and that those qualifications are what employers and universities want.

"An important part of this is making sure that qualifications available in Wales are recognised and valued not only in Wales, but also across the border and worldwide."