Labour is to end years of inequity in capital funding which have seen some authorities able to borrow hundreds of pounds per pupil while others could borrow less than five.
School standards minister Stephen Byers said this week that the funding system for repairing buildings was "grossly unfair", and pledged all local authorities would be guaranteed a minimum level of funds to help their planning.
He confirmed that schools and authorities would have to prove that building projects would improve pupils' achievement if they were to win a part of the extra Pounds 1.1 billion announced in the Budget.
The moves were announced as part of a package of measures on school buildings, designed to end what Mr Byers described as two decades of underfunding. They included support for publicprivate partnerships to "lever in" private cash and moves to make all local authorities draw up a "Domesday Book" of the state of schools.
Speaking at the Professional Association of Teachers' annual conference in Glasgow, he said the backlog of school repairs needed to be tackled "as a matter of urgency".
But it was impossible to defend the present system of allocating permission to councils to borrow money for building projects. In the past local authorities have been given permission in return for removing surplus school spaces and accommodating extra pupils.
But that takes no account of the state of an authority's schools. And while five local authorities get more than Pounds 200 per pupil - Redbridge gets Pounds 256 - 16 councils get less than Pounds 5 per pupil. Hartlepool Council, a new unitary authority, got just 38p per pupil last year - although that is thought to be an anomaly.
Mr Byers confirmed that the first tranche of cash under the five-year capital programme - Pounds 83 million - would be given as grants, not credit.
The money would only be provided to those schemes that clearly identified how standards in schools would be improved, he said. A typical project would be to move computers from a corridor into a classroom.
The proposals link in with plans to improve the management of school places, and local authority and school plans to raise educational standards. Some of the New Deal cash will go to support public private partnerships.
Mr Byers outlined three types of scheme:
* private finance initiatives, under revamped guidelines, by LEAs or groups of schools to buy services on a number of sites;
* joint venture companies set up by LEAs and a private-sector partner to provide services and capital;
* borrowing money on the financial market, with schools working in groups of around a dozen to spread the risk and cut the cost of borrowing - the most exciting of the three, the minister said.