Graham Lane, chair of the National Employers' Organisation for School Teachers, said the School Teachers' Review Body on pay had deliberately set a figure which it knew the Government would not fund and local authorities cannot fund.
The award of around 3.25 per cent, which will be phased for the second year running, is above what the vast majority of councils have budgeted for.
Roy Pryke, chair of the Standing Conference of Chief Education Officers, said a survey of 69 councils showed most had put by less than 3 per cent for pay. One, Northamptonshire, has allocated nothing.
He said: "A phased award is more manageable for LEAs, but that builds up problems for the following year. A few councils can use council reserves but that is a diminishing number. A significant number would not be able to fund an award of around 3.25 per cent."
If the Government was to fund the increase it would cost approximately Pounds 350 million, but Education and Employment Secretary Gillian Shephard said this would have to be found from "efficiency savings" by councils.
Graham Lane said: "There is no justification for the size of the review body's award. At present there is no problem recruiting or retaining teachers. The settlement for the rest of local government was 2.9 per cent - it is unfair that other parts of the budget should suffer to cover teachers' pay."
Somerset was typical in allowing for an inflation-level rise. A spokesman said: "Cuts are inevitable, classes will rise and schools will not be able to afford curriculum advice."
Northamptonshire said it is trying to preserve the amount of money given to pupils with special educational needs. It expects to have to make an extra 271 statements and will have 1,288 extra pupils.
Leeds, which will be spending Pounds 16.6m more on education than the Government believes is necessary, had anticipated a pay settlement for school-based staff of up to 2.5 per cent.
Fabian Hamilton, education chair, said: "If we only passed on to our schools the funding levels recommended by central government we would be facing more than a 10 per cent increase in class sizes and a potential loss of around 600 teachers."
Budget problems are exacerbated in 31 local authorities where secondary funding is subject to the common funding formula for grant-maintained schools. These include Gloucestershire, where grant-maintained and local authority secondary heads are fighting side by side against cuts. The authority has allocated 3 per cent for pay. Standstill budgets in both sectors for next year look like being cut by at least 2 per cent.
Heads claim the extra Pounds 7.8m ministers said should be spent on education in the county in 1997 may be slashed by Pounds 2m to Pounds 3m to put more money into other services.
Lawrence Montagu, chair of the Gloucestershire Association of Secondary Heads finance group, is facing cuts of Pounds 40,000 to Pounds 50,000 at his school, St Peter's High in Gloucester.
"We have got a national curriculum, national league tables, national exams and yet we are funded so differently throughout the country in a business where costs are very similar."
David Hart, general secretary of the National Association of Head Teachers, said it took two to tango. While the Government must ultimately take the blame for not footing the bill, he argued, local authorities ought to have anticipated the rise would have been at least 3 per cent.
The full details of the teachers' pay award were not available as The TES went to press. A full report will appear in next week's edition.