A steep rise in the cost of books over the past year has left library budgets way behind, according to new research from Loughborough University.
It is understood that Mr Smith now wants to redirect the annual Wolfson Challenge Fund, established in 1997 to promote information technology. It is likely that the money will in future be used to build special book collections in selected libraries. The Department for Culture, Media and Sport has promised an announcement shortly.
The Loughborough research shows that spending on books by libraries rose last year by 1.5 per cent. But this was outstripped by book prices which, over the same period, increased by 4 per cent.
David Spiller, director of the university's library and information statistics unit, which produced the report, said: "There appears to have been a small increase in spending by libraries but because of the rise in book prices there has not been an increase." He said further library closures would be likely.
Loughborough University's report found that 80 per cent of authorities had increased their spending on library books for the first time since 1994.
Overall spending on all library materials rose by 1.4 per cent and researchers predicted a further increase of 1 per cent for next year.
The TES launched its libraries campaign this summer in response to a lack of funding and increasingly limited opening hours.
Although the Government is investing more than pound;200m by 2001 to connect libraries to the Internet, overall funding has dropped by more than pound;65m since 1992.
Between 1976 and 1998 the number of libraries in England and Wales which were open for more than 60 hours per week fell from 163 to just six.
Writing in The TES last month, Mr Smith promised new benchmarks for libraries laying down minimum levels of book-buying. A decrease in spending in libraries was reported only in Scotland and the English counties.
The metropolitan districts recorded the largest increase of 3.9 per cent, with Northern Ireland at 3.1 per cent and the London boroughs at 2.6 per cent. The report also noted a 1.1 per cent drop in libraries, a 1.7 per cent fall in staff and a 0.5 per cent cut in opening hours.
Although a 2.7 per cent increase in funds to libraries is predicted for next year, book prices are expected to rise well above this amount.
"Public materials fund and budget survey 1998 to 2000" is available from LISU, Loughborough University, Loughborough LE11 3TU