The Government produced a consultation paper three weeks ago which sought to end years of arguments about funding disparities between schools in different areas.

But the document has merely created fresh controversy because, as The TES reported, it raised the prospect that some of the lowest-funded authorities could actually lose ground under the new system.

The row threatens to take some of the gloss off last week’s announcement of an extra pound;13 billion for education in England, with an average 3.5 per cent real increase per year in core school budgets.

Last week Education Secretary Estelle Morris found herself under fire from Labour backbencher David Taylor over the standard spending assessment system as she unveiled the new spending plans in the House of Commons.

Mr Taylor, who represents north-west Leicestershire, said that under three of the four options schools in Leicestershire, which received at least 6 per cent less than the average county, would lose money.

He said: “No one disputes that authorities in areas like London should get extra money for pupils with English as a second language. But many people think they get too much. I was surprised to learn that Leicestershire could lose out.”

Julie Kirkbride, Conservative MP for Bromsgrove in Birmingham, told Ms Morris that the reforms stood only to enlarge the pound;500-per-pupil funding gap between schools in her constituency and those in Ms Morris’s inner-city Birmingham Yardley patch.

Ms Morris, who has denounced the current funding system as “indefensible”, said: “There is life beyond the SSA formula. The consultation is out, with four options for comment. In due course we shall make a decision.”

Ministers have said they are not necessarily committed to any of the four options. They argue that the system which emerges will more fairly reflect the costs of education in different areas in the country.