Department for Education and Skills officials are understood to be considering “ring-fencing” the pound;27 billion schools budget - this would prevent local education authorities spending money intended for schools on anything else.

The LEAs would still be given room to adjust funding to reflect schools’

individual needs, but overall would enjoy far less flexibility.

And a national schools funding agency that bypasses LEAs altogether is understood to remain on the long-term agenda, even though Education Secretary Charles Clarke has told councils he does not favour the idea.

DfES and Downing Street advisers have been pressing heads’ leaders to call for direct funding from Whitehall in a bid to soften up opposition to it.

At this week’s workload conference, Mr Clarke repeated his aim of introducing a three-year pay deal, setting budgets earlier with a minimum funding increase for every school. But officials worry that he will not be able to guarantee extra cash for every school if LEAs retain control of funding.

At the same event schools minister David Miliband, said schools should use the money they had better. “We cannot live in a world where every time we want to do something different we say we want a new pot of money for it,” he said.

Meanwhile in Norfolk, where Mr Clarke has his constituency, the LEA reported this week that 24 schools had already opted to take a total of pound;380,000 out of their building budgets to solve immediate funding problems.

In York where the crisis has left more than 91 per cent of schools with budget shortfalls, 28 teaching and 17 support staff posts are being lost, not including those caused by falling pupil numbers.

In Durham heads, governors, union officials and the LEA have written to Mr Miliband for a third time to complain about the loss of pound;3.37 million in standards funds. Elsewhere schools are relying on the proceeds of summer fetes to get them through the crisis.