Labour would abolish the voucher scheme and encourage local authorities to work with the voluntary and private sectors to provide extra places.
Mr Blunkett said the voucher scheme now being piloted will mean 3,000 four-year-olds missing out on nursery education. Local authorities will have more than Pounds 565m taken away to pay for vouchers, representing Pounds 1,100 for every four-year-old in council-run classes, according to Labour. Ten local authorities will have more than three-quarters of their funding for under-fives "clawed back".
Providing places for all three-year-olds will take longer because of possible problems recruiting and training teachers, Mr Blunkett said.
"Local authorities are being asked to foot the bill for the voucher scheme. This will have a devastating impact on provision. Experienced teachers will have to be laid off and places for three-year-olds cut. Services for children with special needs will be put at risk.
"Far from promoting an expansion of provision, the voucher scheme penalises those councils that have already invested in their under-fives services, " he said.
In a new resource pack titled The Politics of the Nursery, Labour says all three- and four-year-olds whose parents wish them to have a free place will be entitled to one.