A similar scheme to expand popular schools in England was announced just before the last election. The money was subsequently withdrawn.
The original scheme was considered controversial because it would have allowed popular schools to expand even if neighbouring schools had spare places. The Welsh initiative is seen as a policy designed to enhance Mr Redwood's reputation as a radical minister.
The Welsh Secretary has also announced his aim of eight out of 10 young people achieving five GCSEs at grades A to C, an intermediate General National Vocational Qualification or an NVQ at level 2, by 1997. He also wants to see half of all young people achieve two A-levels, an advanced GNVQ or an NVQ level 3 by the year 2000.
The aims, which are in line with national education and training targets already announced in England, have been criticised by teaching unions, who say they are only achievable with more Government investment. Wales lags behind England, with just 39 per cent of 16 year-olds gaining higher grades GCSE, compared with 43 per cent in England.
The director of education in Mid Glamorgan, Keith Davies, said schools should set their own targets. "Schools in more affluent areas generally have less difficulty in reaching targets than schools in poorer areas."
Frank Callus, deputy head of Tredegar comprehensive, a 970-pupil mixed 11 to 18 school, supported the idea of pushing children in disadvantaged areas to improve their performance, but added: "Progress should be measured against what is achievable."
At Tredegar, near Ebbw Vale, 26 per cent of pupils obtained five A to C grade GCSEs in 1993, rising to 28 per cent last year.