The leaflet, 30 Tough Questions for LEAs, has been sent to branches of the foundation to help persuade parents to back campaigns for their children's schools to opt out.
It presents a series of attacks on local education authorities, thinly disguised as questions, such as "Why are so many LEAs hostile to schools having sixth forms?" and "How can LEAs justify intimidating heads who support grant-maintained status for their schools?" It also asks why GM schools achieve better exam results, lower costs and better conditions.
Mrs Shephard has now admitted in a letter to Liberal Democrat education spokesman Don Foster that it was "unhelpful" to pose lists of questions without answers and said the leaflet was "inconsistent with at least the spirit" of the code of practice. But Mr Foster believes she has not gone far enough. He wants the Pounds 650,000 a year Government grant for the foundation to be withdrawn and the leaflet pulped. "It is disgraceful that Mrs Shephard is taking no action," he said. "She spends a lot of time criticising campaigners on the other side."
Martin Rogers of the anti-opting-out group, Local Schools Information, said: "The leaflet is extremely biased propaganda and is clearly a flagrant breach of the code of practice. But it is sadly predictable that Mrs Shephard is not prepared to do anything about it."
Sir Robert Balchin, the foundation's chairman, defended the leaflet. He said: "These questions stimulated an extremely valuable debate. They drew attention to the success of grant-maintained schools and both the Conservative and Labour parties now admit there are many deficiencies in some local authorities and questions to be answered."
This is the latest episode in a long-running battle over campaigns on opting out. Last year the Trustee Savings Bank withdrew sponsorship of a leaflet produced by the independent Grant-Maintained Schools Centre after complaints that it was biased. New ballots are under way at two schools in Nuneaton, Warwickshire which was at the centre of a High Court hearing last December. Mrs Shephard was ordered to consider holding new ballots after she admitted that parents had been given misleading information.
She told governors at Stockingford infants and junior schools that she had looked again at the issue in the light of the court's findings. The new ballots are due to close in two weeks.