Ministers plan to extend their pupil premium funding to all pupils who have been eligible for free school meals at any point in the previous six years, it was revealed this week.
Education secretary Michael Gove told MPs he proposed to make the change once the scheme - aimed at improving achievement among disadvantaged pupils - was "up and running" because he did not want to create another poverty trap.
In 201112, the first year of the scheme, an extra #163;430 will go to schools for every pupil eligible for free school meals.
But Mr Gove told the Commons education committee he did not want to give families an incentive to continue to qualify for free meals.
"A family that falls into poverty and then comes out of it will not lose their eligibility for the pupil premium," he said.
Government figures show that change would mean that an extra 50 per cent of pupils would qualify for the funding.
But the money allocated for the policy has already been fixed for the next four years. So the change could lead to the sum allocated to each pupil - already dubbed a "damp squib" by heads - falling by a third.
It will also raise questions about whether the money will be going to where it is needed most.
Department for Education analysis shows that the longer a pupil is eligible for free school meals, the lower their attainment. So Mr Gove's scheme would mean a transfer of some premium funding from the lowest achievers.
Luke Sibieta from the Institute for Fiscal Studies, said: "It would mean the permanently disadvantaged would get less."
The premium would move up the income ladder towards the working poor, he said.
The scheme could also be significantly altered by a proposal to ensure that deprived children receive the same level of support wherever they live.
Next year will see the premium allocated on a uniform flat rate. But if ministers decide to use the scheme to meet their goal of equalising deprivation funding it could lead to funding for inner-city pupils falling, relative to disadvantaged pupils in rural, traditionally under-funded areas.
Heads' leaders have mixed feelings about that prospect. On the one hand it can be argued that a concentration of deprived pupils creates its own particular difficulties and means that inner-city schools need the extra per pupil funding they have tended to receive.
But rural schools with much smaller numbers of disadvantaged pupils lack the economies of scale enjoyed by their urban counterparts.
Malcolm Trobe, Association of School and College Leaders policy director said: "A school with just three kids on free school meals would find it cost much more to get each of them extra help than a school with 70. There is no simple answer."
A Department for Education spokesman said: "The pupil premium is simple and transparent and will mean that many schools will see real-term increases in their funding, with the most deprived schools benefiting the most.
"Through the premium we will provide #163;430 extra funding for every child on free school meals next year and this will figure will continue to increase over the next four years.
"The money will go straight to schools and they will be free to decide how best to use it to help the poorest pupils increase their attainment."
Funding main points at a glance
- School budgets in 201112 will be based on the same level of cash funding as this year.
- The pupil premium will add an extra #163;430 for every pupil eligible for free school meals.
- Ministers admit that changes in inflation forecasts mean that overall this will amount to a cut.
- The Institute for Fiscal Studies has calculated that a quarter of schools will see their budgets rise but the rest will have less.
- Ministers say no school will lose more than 1.5 per cent per pupil.
- But the IFS says this is a cash guarantee that could allow real terms cuts of up to 4 per cent.