Government actuary Chris Daykin has told Education Secretary David Blunkett that local authorities must pay an extra 4.6 per cent of the payroll into pension schemes.

But the councillors have warned that unless the extra money was made available from central Government, they would have no choice but to cut back on the cash they could make available to schools.

Graham Lane, education chair of the Local Government Association, accepted that the pound;600m calculation was correct but warned it would be impossible for local education authorities to meet that cost without taking money from elsewhere.

And he said: “We are talking about a huge amount of money and unless the Government takes account of this ... it is going to pose a massive prolem.

If the Government does not come up with extra funds, the money will have to come from local education authorities and schools which would mean fewer teachers.”

The demand for an increased contribution from councils arises from changes that will improve teachers’ pensions.

The changes will also cover inflation and the increased numbers of teachers who are taking early retirement.

Teachers pensions are funded on a “notional” basis, whereby the money comes from the Treasury rather than an investment fund built up from superannuation payments.

In return for better assumptions about the investment return on this notional fund, local education authorities are having to put in more cash.

Councils were due to increase payments to the teachers’ pension scheme in 2002, but Mr Blunkett has persuaded the Treasury to put this date back until 2004.