Government officials were this week making a last-ditch effort to persuade more local authorities to take part in the first phase of the proposed pre-school voucher scheme and avert embarrassment for Education and Employment Secretary Gillian Shephard.
The list of those taking part will be announced next week along with the name of the private company chosen by the department to run the voucher scheme. A total of 10 firms are understood to have put in bids.
Amid growing signs that the Government was having difficulty finding potential recruits to take part in the first phase, due to start in April next year, the education junior minister Robin Squire this week announced that pre-school playgroups would, after all, be given equal funding with nursery schools.
The U-turn means parents who send their children to playgroups will now be able to claim the full value of Pounds 1,100 offered to those with children at nursery schools.
The Government's original plan, to make playgroup vouchers worth just Pounds 550, had provoked protest from pre-school campaigners.
Robin Squire said the decision would enable playgroups to "play a full and enthusiastic part in the expansion of provision for four-year-olds".
The decision added fuel to criticisms that the scheme, announced by Prime Minister John Major during his party leadership re-election campaign in July, apparently in the teeth of opposition from Mrs Shephard, was being rushed through.
So far, only five LEAs, Buckinghamshire, Norfolk, Westminster, Wandsworth and Kensington and Chelsea, have signed up for the experiment. The final tally is likely to fall well short of the dozen or so authorities the Government had hoped to include in the first phase.
A senior Government source insisted: "Clearly time is running out, but talks are being held and we will have enough." He would not comment on which LEAs were involved.
When the full scheme comes into operation, in April 1997, parents of all four-year-olds will be given a voucher which they can cash in at any state or private nursery school, or playgroup.
Critics claim the scheme will lead to money being channelled away from state-funded nursery schools into the private sector.
The cost of funding an extra 200,000 playgroup places at the same level as nurseries will add Pounds 100 million to the cost of the voucher scheme.
Last month the Government's curriculum advisers proposed learning targets for all five-year-olds, which the Prime Minister said would form the basis for tests on entry to primary school. In order to meet such targets, many playgroups will have to offer a more structured education, in common with nurseries.
Mr Squire said: "This is an opportunity for all playgroups to improve the quality of their provision to the standard offered by the very best."
Margaret Lochrie, chief executive of the Pre-School Learning Alliance, welcomed the Government's change of heart, which restores parity between playgroups and nurseries - something the PLA had insisted on.
But the move has been criticised by LEAs and opposition leaders Alan Parker, education officer for the Association of Metropolitan Authorities, said: "The voucher scheme is being rushed to get something up and running before the next general election. It is quite clearly politically motivated and education considerations are being sacrificed."
Shadow education minister David Blunkett reacted by calling on Gillian Shephard to scrap the voucher scheme and introduce full nursery provision for three and four-year-olds.
"The Government's capitulation to the PLA's threat to boycott the voucher scheme illustrates the turmoil into which this ill-thought-through scheme has already descended.
"The lower-value voucher offered to the playgroups, the justification given at the time, and now the reversal of that decision, is further evidence of the utter confusion surrounding this discredited policy," he added.