Teacher training institutions will be able to bid for a slice of the money under the scheme, which replaces the largely ineffective bursary system.

The measures, announced by the Teacher Training Agency, follow news that the Government has provided funding for a 50 per cent rise in secondary school training targets over the next five years.

This information emerged as leading teacher trainers, education officers and academics warned of an impending shortage of teachers.

A spokesman for the Teacher Training Agency said that the change would enable it to target geographical and subject areas of shortage more efficiently.

Figures suggesting huge future shortfalls in teacher numbers were exaggerated, he said.

“It is far too early to start panicking over recruitment,” he said, adding that colleges had been oversubscribed, with 132 applicants for every 100 teacher training places last year.

In Scotland, teaching graduates are greatly outnumbering available posts.

He denied that early retirement - taken by nearly 17,000 teachers last year, 5,000 more than in 1985 - was exacerbating shortages.

“We are concerned about a rise in the school population and all our work is aimed at offering more diverse routes into training,” he said.

A new licensing scheme will enable schools to train their own staff in areas of particular need. The TTA this week announced five new providers of school-centred initial teacher training courses and another two PGCE distance learning courses.

Mary Russell, secretary of the Universities’ Council for the Training of Teachers, said that while there were plenty of PGCE applications at primary level, those for early years and secondary posts were down.

John Howson, deputy director of the education department at Oxford Brookes University and one of the country’s leading authorities on teacher recruitment, said: “We’re heading for what is potentially the worst teacher recruitment crisis since the raising of the school-leaving age in 1972. All the warning signs are there. Having had five years when there were no teacher recruitment problems people have become complacent but the crisis is upon us. I have been warning the Government about this for two or three years.”

The latest Graduate Teacher Training Registry figures - which cover the bulk of PGCE courses - show that there have been 545 applications from students wanting to train as maths teachers from next September. The figure for the corresponding week last year was 659.

But the most dramatic falls have been in the sciences and craft, design and technology. The number of science applications has fallen from 1,411 to 1,068 and the CDT applications have collapsed. Last year there had been 355 by this time - but this year’s total is only 27.

Other subject areas where applications have dropped are modern languages (down from 1,012 to 962), business studies (from 254 to 199) and geography (from 708 to 625).

Mr Howson agrees that bursaries did very little to boost recruitment to shortage subjects but he nevertheless feels that the Government’s decision to scrap its bursary scheme without consultation was precipitate.

“If recruitment levels continue at this rate some institutions are not going to be able to fill all the places on their PGCE courses,” he said. “There will then be pressure to accept marginal candidates because otherwise they won’t have enough funding to support the course. The alternative is for an institution to offer fewer training places but of course the Government wants them to train many more teachers. It will be quite a dilemma.”