The withdrawal of direct grant aid to cash-strapped rural schools could result in more closures, claims Peter Black, Welsh Liberal Democrat spokesperson for education.
Currently a ring-fenced Assembly government grant of pound;3.5 million is handed out to village schools via local education authorities. In previous years, the special grant for small and rural schools has been used to help pay for shared teachers and additional office support, improved community use of school facilities, and upgrading computers and internet links.
But under a revised system, most of the cash - pound;2.5m - will go into a general pot from 2005-6, leaving LEAs to decide how much rural schools will get.
Mr Black said the Assembly was cutting off vital funding for schools already finding it hard to make ends meet.
He said: "In some areas of Wales the extra cash has been a lifeline to some community schools. Without this dedicated funding, more and more small schools will be forced to close."
Since July 1999 more than 15 primary schools have closed across Wales, according to the Lib Dems.
But a spokesperson for the Assembly government insisted there had been no cut in support to small and rural schools. "Last year there was pound;3.5m for small and rural schools. This year there will also be pound;3.5m for small and rural schools. We are not shutting off vital grant support - we are making the support more focused."
Instead of a single pound;3.5m fund for small and rural schools, the cash will be split between a fund for joint working between schools, pound;1m for additional revenue funding (which can be used to provide extra support to teaching heads), and pound;1m for specific small and rural projects.
Last month opposition from parents, teachers and politicians forced Denbighshire to withdraw plans to consult on closing or merging 14 of its 52 primaries.
Mick Bates, Lib Dem AM for Montgomeryshire, said the survival of community schools in rural Wales was also a concern there. And the loss of the grant money would mean bigger hardship for schools already struggling.
He said: "There is no easy option here. I understand there is an issue about equality because it may not seem fair to spend huge amounts of money just to sustain country areas, compared to deprived areas.
"But in this situation I believe it is important to have community over equality. In essence, rural schools have more needs which warrant extra funding.
He added: "The money may seem like a drop in the ocean, but it really helps to keep two schools going when they share resources. It is a lifeline to them, and not being directly accessible could be a huge financial headache and mean they have to close."
Mr Bates's wife is head of two small primary schools, Ysgol Efyrnwy Llanwddyn and Ysgol Pennant, in rural Powys (see story above). Buddug Bates agrees the withdrawal of the cash grant could have a detrimental effect on schools in the area.
The head, who has been running the schools for just over two years, said:
"Although I am not struggling, the cash does help pay for many things such as transport.
"There is a fear among all rural schools that more closures could happen in the future, and many will really struggle because of the withdrawal of direct grant help."