The purpose of this report is to review the past and present external quality assurance for higher education in Portugal and to recommend a future quality assurance and accreditation system that meets the standards for quality assurance in the European Higher Education Area. The review was carried out on the initiative of the Portuguese Ministry of Science, Technology and Higher Education (MCTES) which requested ENQA (European Association for Quality Assurance in Higher Education) to appoint an international panel to conduct the review. During the review process, the Portuguese government announced that the present evaluation system will be dismantled by the end of 2006 and replaced by a new system for accreditation by the beginning of 2007. This initiative parallels activities in a growing number of European countries that are applying quality assurance systems for higher education that are based on an accreditation approach. The panel is, however, convinced that the new system would benefit from a broader quality assurance approach than one based exclusively on accreditation. The panel has completed a review of the past and present system in accordance with the agreement with MCTES, and the European standards for the review of external quality assurance agencies have formed the basis for the review process. Considering the fact that the European standards were only recently adopted by the relevant ministers of the Bologna signatory countries, the current quality assurance agency, the National Council for Evaluation of Higher Education (CNAVES), cannot in all fairness be expected to have developed its organisation and processes according to those standards. However, it has been the conclusion of the panel that the review would suffer from a serious lack of transparency and comparability if the standards were not applied as the frame of reference for the review. Appended are: (1) Terms of reference; (2) ENQA panel; (3) Professional associations; (4) Site visit programme; (5) Summary list of European standards for quality assurance; (6) Overview of recommendations; (7) Budget for the quality assurance agency; and (8) Criteria for accreditation of university study programmes and polytechnic study programmes. (Contains 7 footnotes and 28 notes.)