Some of Britain’s biggest companies have signed deals with schools giving students entering sixth-form the opportunity to compete for bursaries worth up to #163;500.

Leading firms, including Marks amp; Spencer, the Midland Bank and British Telecom, have signed deals with a number of schools in Devon, Norfolk and Berkshire.

The deals are certain to be controversial because they will force students to compete for a limited pot of sponsorship money. It is also predicted that some students will save their bursaries to help them pay their way through university or college, once student loans are introduced next September.

One of the sponsorship agreements is between a consortium of schools in Mr John MacGregor’s constituency (Norfolk South) - who share the same sixth-forms - and 12 firms with links in the area.

Under the deal, 10 students will receive #163;100 a year each. The bursaries will be open to both A-level and vocational students for up to two years. In addition, they will do paid work for their sponsoring companies during school holidays.

Mr Ivor Daymond, head of Earlham Comprehensive, one of the three schools involved, said the deal was proving successful, with four or five students chasing each bursary. Sponsors taking part include the Trustee Savings Bank and Norfolk County Council. The schools are currently holding talks with one of the Armed Services, which is considering joining the scheme.