The Government campaign to reduce class sizes could result in children being badly taught in corridors and store rooms, ministers were warned this week.
Last week David Blunkett, the Education Secretary, gave Pounds 22 million to 65 local authorities. The cash was intended to ensure that 100,000 five to seven-year-olds - a quarter of all overcrowded infants - are taught in classes of fewer than 30 from this September.
While local authority chiefs welcomed the money, the Government was warned this week of a possible teacher shortage in some parts of the country and of children learning in unacceptable conditions.
Some schools have admitted that they cannot afford new classrooms and that the new classes will have to be accommodated in existing space.
In Bury, where 3,700 youngsters will be taken out of overcrowded classes at a cost of almost Pounds 600,000, education chiefs admitted to the "innovative" use of "spare space in areas other than classrooms, such as resource areas and libraries".
"This means schools do not have to rely on obtaining further funding for extra classrooms in order to improve the levels of teaching," a spokesman added.
Others plan to modify assembly halls to provide teaching space.
The inner cities are expected to be the worst affected by a staff shortage as teachers depart to the new jobs in the outer boroughs and suburbs.
Professor Alan Smithers of Brunel University's centre for education and employment research warned ministers to expect problems with the distribution of teachers and their expertise.
He said that many of the primary initial teacher-training institutions that attracted the best applicants tended to be in the north of England. "Teachers are not the most mobile profession and most remain to work within 20 miles of the institution in which they trained. This could mean southern areas losing out or having to employ 'returners' to the profession, who may not have had specific training in teaching literacy and numeracy.
"It seems that some schools have come up with some very imaginative schemes for using store rooms and corridors for teaching because there is no money available for new buildings to accommodate extra classes.
"There are real concerns about the conditions in which some teachers and pupils may be expected to work."
John Howson, a specialist in teacher recruitment, said: "If you reduce class sizes in the outer boroughs then you risk a shortage of teachers in inner-city schools. There are no mechanisms available to encourage inner-city teachers to remain.
He said it would be even easier in future for teachers to step down from their existing jobs because new regulations allow teachers to take on lower-paid jobs and keep up their pension payment.
Mr Howson said the potential teacher shortage would hit London hardest where the recruitment and retention of staff was already at crisis level.
The Teacher Training Agency said this week there was no cause for concern and that almost 11,000 would-be primary teachers had applied for fewer than 5,000 training places for 1998-99.
Local authorities had to compete for a share of the Pounds 22m, money saved from the first phase of the abolition of the Assisted Places Scheme.
In all, about Pounds 100 million will be made available over the next five years as the funds are clawed back from the independent sector.
Local authorities will have to bid for money for every subsequent year, meaning that teachers employed under the scheme will be working on fixed-term contracts.
Local authority chiefs this week welcomed the additional cash. Chris Curtis, assistant education director in Derby, said the city'sPounds 1 million allocation would eliminate the need for any child to be in a class of more than 30.
The authority expects to recruit up to 80 "high quality" teachers centrally, using a panel of headteachers, and staff will be sent on enhancement courses to help them adjust to teaching and organising smaller classes, he said.
A spokesman for Wandsworth, south London, said: "We only asked for money for six schools and were surprised to find we got what we asked for."
Pat Petch, chairman of the National Governors' Council, said that schools were faced with keeping children out and denying parental choice to keep down class sizes, or expanding schools to meet demand and creating larger teaching groups.
"We have a lot of concerns about the way this class sizes issue is being dealt with at the moment," she said. "If you are teaching children in inadequate surroundings, whether or not there are extra teachers, then that in itself will have an effect on standards.
"We want to meet with the LEAs and talk to the Government to reassure everyone that the situation is under control."
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