The most significant difference between the two tests is how they test for speaking ability. With the IELTS, the test taker actually speaks with a human being who is trained to evaluate fluency and conversational ability. With TOEFL the test-taker essentially speaks to a computer, the conversation is taped, and then six reviewers grade the session. IELTS maintains that its test is more realistic, and TOEFL claims that because it has only one tester/grader during this section of the exam, the IELTS’ is more prone to manipulation and has inadequate quality control.
Inside Higher Ed has the full story in Taking on TOEFL .