Sefton council, on Merseyside, offered pupils the chance to win a computer games console, a bike or a television and DVD player in return for ensuring their parents sent off their postal ballot papers.
The initiative was condemned by the National Union of Teachers. Doug McAvoy, general secretary, said: "I am appalled at this scheme. While participation in elections is to be encouraged, this should not be done through bribes to children.
"This is encouraging pester power by children. We do not have compulsory voting in this country and the right not to vote is a valid one."
Council leaders defended their actions claiming no electoral rules had been broken and denied they were bribing people to vote.
Sam Tunney, Sefton's deputy returning officer, said: "We're clear that we're not breaking the law. We checked it out before we ran the competition."
An Electoral Commission spokeswoman, however, suggested the scheme might violate a clause in the Representation of the People Act, which refers to the use of bribery to encourage or discourage voting.
She advised anyone concerned to contact the local electoral services office.
Letters outlining the competition were sent to schools at half-term and they began distributing them to pupils on Monday. Three prizes were available for pupils and three for schools.
The letter told pupils: "We need your help. Adults have the right to vote but often they don't bother. This year they can vote in their own house and send their votes back to us in the post."
It continued: "We need your help in getting them to vote ... If you get a parentguardian to vote, you could win a great prize for you and one for your school as well. You choose your prize worth up to pound;250 - your headteacher chooses the school's prize."
Parents had to sign a declaration saying they had sent in their postal vote and agreed that their child's name could be entered in the prize draw.
A council spokesman said: "With there being just three prizes on offer for children for the whole of the borough, Sefton refutes NUT claims that this constitutes a 'bribe' or 'prizes for votes'."
David Walker, head of the 800-pupil Churchtown primary in Southport, sent out the forms after consulting the school council, but said relatively few were returned.
"I put it under the banner of citizenship," he said. "I thought it was a way of promoting universal suffrage to pupils."