The Home Office has assured local authorities that teachers will not have to inform on pupils as part of the Government's drive to increase immigration control.
The proposal emerged in the summer when Michael Howard, the Home Secretary, announced ways in which Government departments could co-operate to strengthen immigration control.
He said council staff would be given training in weeding out "immigration offenders" seeking student grants and that the Home Office would be working with the Department for Education and Employment on immigration guidelines for school admission authorities.
This was widely interpreted as an attempt to recruit school staff, along with doctors and employment agencies, as amateur immigration officers.
An education spokesman for the Association of Metropolitan Authorities said: "It's clearly not desirable for schools to act as immigration officers. The information a person is required to give to enrol in a school has no bearing on immigration status; the only checking that schools and local authorities are required to do is to check that the child is living in the right catchment area. The Government knows it's on a hiding to nothing on this one."
The plans attracted attention because of the Asylum and Immigration Bill, to be announced in the Queen's Speech next week, which will clamp down on asylum applications and publish a "white list" of "safe" countries.
But a spokeswoman for the Home Office said the proposals would not form part of the Bill and local authority associations have been told that "there is no expectation that teachers will be obliged to report their suspicions".
She added: "It was never intended that teachers and doctors on the ground would be expected to carry out these checks."
Home Office officials are, however, still negotiating with the DFEE on how to help local authority workers identify illegal immigrants applying for student grants.
And Jill Rutter, education officer for the Refugee Council, believed the DFEE was still debating the issue of teachers reporting on pupils.
Her main concern was the fate of the children whose parents are seeking asylum because of benefit changes which come into affect next year which could affect around 27,000 people.
"What's going to happen to these families? How are schools going to help?" she asked.
Local authority associations have told the Home Office that administrators would be prepared to fulfil their duties as citizens by reporting law-breaking if they encountered it in the course of normal duties.
But the AMA spokesman said: "We don't believe that the process of issuing awards should be distorted in order to turn admissions officers into informal immigration officers".
The AMA was confident the existing system for checking the validity of applications for student awards was working, but said that if the Home Office could produce evidence of inconsistency it would be considered.
It was not opposed to officers receiving short briefings on immigration, but extensive and expensive training would be resisted.
Whatever the original intentions of the Home Office, the public perception remains that schools could be drawn into immigration control.
John Sutton, general secretary of the Secondary Heads Association, said: "Schools do not collect information about place of origin and heads would not wish to do so.
"The majority of SHA members would be entirely opposed to collecting and supplying immigration information on pupils."
Gillian Shephard, the Education and Employment Secretary, has already made plain her opposition to Mr Howard's plans to fine employers who hire illegal immigrants and this has now been modified. Her views on the possible involvement of schools and local education authorities in immigration checks are not clear.