Education Secretary David Blunkett is not expected to process any more applications for the scheme that gives clusters of schools in deprived areas an extra pound;500,000 a year.
The decision to limit the zones to the existing 73 was taken after inspections by the Office for Standards in Education got under way last year. OFSTED has inspected six zones and is understood to have expressed reservations to ministers. Funding for the first 25 zones is guaranteed until 2003. A decision on the funding of the other 48 zones is expected later this year.
The original idea was for zones of 0 schools that would get pound;1 million year, a third of which was to come from the private sector.
They were to test new ways of running schools and bringing in innovative ideas. Mr Blunkett told local authorities that he wanted to see 100 before the next election.
Ministers have privately been disappointed that many of the zones have not proved to be exciting experiments and industry has not been keen to provide either cash or initiative.
The Government is now concentrating resources on the Excellence in Cities programme which is likely to be extended to all schools. The decision will not affect mini action zones created as part of this programme. Ministers expect to be funding 80 mini zones by September.