Australian schools will be denied federal funds if they do not fly the national flag each day, publish their academic results and give their pupils at least two hours a week of physical education.

In what the teachers’ union described as an unprecedented intrusion into the day-to-day running of schools, prime minister John Howard and education minister Brendan Nelson announced last week that legislation will be introduced to force schools to meet key requirements if they are to receive their share of grants worth $31 billion (pound;12bn) over the next four years.

As well as ensuring they have a “functioning” flagpole and an Australian flag, schools will be required to report to parents in “plain language” on tests in civics, citizenship, English, maths and science, and must also publish information about results, school-leaver destinations, absentee rates and teachers’ qualifications. The various states, which have responsibility for government schools, will also have to agree on a common school starting age by 2010.

The demands were attacked by the Labor party and severely criticised by parent and teacher groups. Although Labor said it would support the legislation so as to ensure schools got their money, it criticised the conditions. The Australian Education Union described the move as an astonishing level of micro-management and hypocrisy from a government “allegedly committed to local decision-making”. “An arbitrary daily raising of the flag removes the link with meaningful occasions and may have the opposite effect to that which is intended,” said AEU president Pat Byrne.

“Linking it with funding certainly will.”

Mr Howard sparked widespread controversy in January when he blamed “values-neutral” and “politically correct” teachers for the drift of parents from government to private schools.

The condition of two hours’ PE for each child is intended to partly tackle the problem of childhood obesity. Dr Nelson said: “The time dedicated in the school week to PE is declining and more than 40 per cent of children play no sport.”

The federal government provides 12 per cent of state schools’ funds and more than 80 per cent of Catholic and private schools’ funds.