"We have been very badly wounded by this," Elizabeth Maginnis, the city's education convener, said.
One of Brian Wilson's first acts as minister was to accept that vouchers could not be immediately abandoned and he is expected next week to reveal detailed plans for replacing the scheme. However, Mrs Maginnis appealed for fair treatment in the city's financial allocation in 1998-99. This should not be based on current intake figures which have been distorted by the vouchers, she insists.
Mrs Maginnis said: "A very substantial number of parents have opted out of nursery education to use vouchers as a way of subsidising extended day care. The message from this is that high-providing authorities which have a mix of provision, have suffered. The private sector has benefited by over Pounds 500,000 as a result of the decision to continue vouchers for another year. This is a message that will have to be heard in the Scottish Office."
Empty places could yet be filled by three-year-olds, although the council is warning that budget cuts are inevitable in the city's half-yearly review.
The Scottish Office also came under fire for failing to intervene in the continuing dispute over cross-boundary payments between Edinburgh and the three neighbouring councils previously in Lothian Region. The city claims it is still owed Pounds 272,000 by East Lothian, West Lothian and Midlothian for providing nursery and special education places for children from the outlying councils.
West Lothian also disputes outdoor education charges at the Benmore and Lagganlia centres.
Mrs Maginnis said: "Other authorities have not acted with any honour at all over this and we are picking up the bill for educating their children."
Elizabeth Reid, Edinburgh's education director, said the city was charging councils the cost of the placements and a 5 per cent administration fee. "Our charges are among the lowest in Scotland, on average Pounds 2,000 lower per child than the recommended Cosla rate," Mrs Reid said.
East Lothian took the matter to the Scottish Office which declined to intervene. Mrs Reid said the matter might still be resolved amicably but Mrs Maginnis replied: "That sounds like professional optimism to me."