Critics say this could lead to a diet of chips and burgers, despite Government proposals for tough nutritional guidelines.
Ministers want to delegate school meals funding to all secondary schools by the millennium. But as yet they are unclear on how to police food standards.
The plan, now out to consultation, would mean that governors would determine the price and content of school meals - and that neighbouring schools could have radically different policies.
It has angered one of the biggest trade unions and local education authority leaders who have accused the Government of endangering the future of school meals.
The Local Government Association is calling on all MPs to vote against new regulations due to be presented to Parliament.
And the public services union Unison claims the proposal runs counter to Government moves to introduce minimum nutritional standards.
Graham Lane, education chair of the Local Government Association, added:
"Our school meals service is too valuable to be destroyed in this way. There is no restriction on the prices, no monitoring of nutritional standards, local authorities cannot even monitor what is happening in schools over meals and children as a result will be at the mercy of market forces."
Ten years ago two-thirds of children ate school meals; today it is fewer than one in four.
Performance indicators put out by the Audit Commission for 199697 which exclude children on free meals showed that only 31 per cent of primary pupils bought school dinners.
And Mr Priestley said: "Even marginal movements in price will make parents think twice about their children having school meals. It is a lot cheaper to provide a packed lunch, but it doesn't give children the benefits of a nutritionally-balanced school meal."
Just last month the Government announced plans to introduce compulsory nutritional standards next autumn, covering food offered at nursery, primary and secondary levels.
The consultation document issued by the Department for Education and Employment admits: "Different schools in the same area can have radically different policies on pricing and content of meals, including free meals. "