The Labour-dominated metropolitan councils this week revealed their alternative to the Government’s troubled nursery voucher scheme.

The Association of Metropolitan Councils’ plan recognises that private nurseries and playgroups have a role in any major early-years expansion. It was announced as the Labour leader was driven to deny claims that he was planning to throw his weight behind a modified nursery voucher scheme.

Graham Lane, chairman of the AMA’s education committee, said the city councils would be willing to test its alternative to the voucher scheme.

That plan would use the Pounds 730 million earmarked for vouchers to develop local partnerships between voluntary, private and state providers of education for children under five. The money would be distributed through local authorities, according to priorities decided by the partnership and agreed with the Department for Education and Employment.

The plans came just 24 hours before a report in Tuesday’s Independent claiming that Tony Blair was preparing to accept nursery vouchers.

The story, written by John Rentoul, a journalist and author of a new biography of the Labour leader, claimed Mr Blair believed it would be unthinkable for the party to go into the election “promising to take the vouchers away”.

But Mr Blair’s office was quick to issue a denial. A spokesman said: “The suggestion we might be backing the Government scheme is frankly absurd. The Government cannot even get Tory councils to back the scheme and we have repeatedly pointed out the drawbacks of the scheme and warned of the threat it poses to services.”

The party is still to produce its own alternative plans for expanding pre-school education, but has said it wants to offer places to all three and four-year-olds whose parents wish to take one up.

The Government scheme will allow parents to buy nursery education for their four-year-olds with a Pounds 1,100 voucher from 1997. So far only Norfolk, and the London authorities of Wandsworth, Westminster, and Kensington and Chelsea, have signed up for the 1996 pilot.

Buckinghamshire pulled out of the pilot last week and there is pressure on Norfolk to drop out as well. Helen Banks, chair of the county’s Association for First and Primary Head Teachers, is rallying teachers for an anti-voucher protest next week. She and her colleagues claim the county has not consulted them about the voucher scheme.

Buckinghamshire’s education committee voted 18 to 17 against taking part in the pilot. Labour, Liberal Democrat and independent councillors united to defeat the Tory ruling group and were joined by two church representatives, and one rebel Tory, Peter Mullins. The ruling group is now hoping to overturn the decision at a special council meeting later this month.

The vote reflected widespread unease about vouchers in Buckinghamshire. Several Tory councillors privately agree with Mr Mullins that voting for the pilot amounted to “an act of blind political faith, like buying a timeshare in Thailand”. An effective anti-vouchers lobby was led by parents from council-run Henry Allen nursery school, which Mr Mullins’ own children attended.

Henry Allen’s chair of governors, Frances Adams, said: “I’m delighted with the way the vote went. Mr Mullins has been a friend of nursery education through the years. We will support him as he supported us, and will campaign for his re-election if he loses the Conservative whip.”

Another governor, Theresa Stroud, said: “Under the voucher scheme, anyone will be able to set up a nursery and take in voucher-wielding parents, whether or not their staff are properly qualified.”

Henry Allen nursery specialises in teaching children with special needs, but Ms Stroud said vouchers would stop that. “Special needs children cost a great deal more than Pounds 1,000 a year - but there is no provision for any more money.

“Parents who can afford it will add their own money to the voucher. Parents who cannot afford to do that will get insufficient nursery education for their children.”

Henry Allen governors said it was unfair that while private nurseries can take money as well as vouchers from parents, local authority nurseries cannot.

Mr Mullins said: “The scheme is just 19 weeks away and we still have no real information on how it would work or what the financial consequences are. Without that, vouchers are part of a casino culture.”