There is a crisis in teacher education. This is a worldwide phenomenon which is particularly acute in English speaking countries. There continues to be a shortage of well qualified recruits to teacher education courses and governments show a continuing reluctance to support teacher education programs. On the other side of the equation universities and teacher educators are suffering a crisis of confidence as to the most effective way to prepare teachers for a transformed and uncertain future of knowledge creation and transmission. This paper will consider the dynamics and scope of this crisis exploring the reasons and causes for the retreat of governments from the direction of education policy and the crisis of confidence surrounding the legitimacy of knowledge which has the potential to destroy the teaching profession. It will then consider responses to the agendas of deregulation and privatisation and argue that the current situation offers educators the opportunity to embrace diversity and deregulation in the process of teacher education for a new liberation of learning.