Mr Balls' comments came after he received a letter from Brian Lamb, who is leading a review of parental confidence in SEN provision, which raised a number of concerns that had been highlighted by families.
The letter said that parents of children with SEN feel that they have to 'battle' the system to secure high-quality provision for their children. It also said there was a lack of information for parents and a failure by local authorities to comply with their duties in relation to children with SEN and disabilities.
Mr Lamb, who is chair of the Special Educational Consortium, will look at how information is shared between agencies and with parents of SEN children, and at how parents can be more involved in their child's education. He is due to submit his findings in autumn 2009.
Mr Lamb told Nursery World, 'There is not enough focus and expectation on the achievement of children with SEN, both academically and socially. We came across whole numbers of parents who didn't know how their child was doing at school, they didn't know that there is a code of practice or what aspirations they should have had for their child. There is an obvious failure within the system to address these issues.'
A £31m pilot scheme will begin in up to ten local authorities in 2009, aimed at making schools rethink their expectations for children with SEN and develop tools and approaches that can be rolled out to other schools and help them adopt an 'outcomes focus'.
The remaining £7m is to be used for other initiatives aimed at strengthening school leaderships and improving online reporting for parents.
Mr Balls said, 'I want to eradicate the presumption that mediocre achievement is the best this group of pupils can hope for and will be looking to the pilot schools to develop best practice in raising expectations through challenging goals and improving academic, emotional and social outcomes.'
He added that Ofsted is to review how the legal frameworks for SEN, disabled children's equality of opportunity and social care all work together.