The Office for Standards in Education said that the quality of education for three and four-year-olds had shown a marked improvement over the past three years.

But inspectors found that there were weaknesses in teaching the basics at one in five nurseries. They called for an overhaul of staff planning and training.

The report said there was still a lot to do to improve language, literacy and maths skills “to enable three and four-year-olds to get the best possible foundation”.

OFSTED called for urgent action to turn around the “stubborn 1 to 2 per cent” ofplaygroups and nurseries which have significant weaknesses.

The report was published as ministers pledged to provide an extra 80,000 free nursery places as part of a plan for universal provision for three-year-olds by 2004.

Education Secretary David Blunkett said free places will be available in voluntary, private and local authority centres next year.

The Conservatives criticised the announcement, saying that the Government was “giving with one hand and taking with another”. Shadow education spokesman John Hayes said there had been a drop of 30,000 in the number of pre-school places since 1997. He also accused the Government of allowing class sizes for four-year-olds to increase.