The confusing and bureaucratic education grants system will be simplified from next year, the Assembly government has confirmed.
Local authorities in Wales can currently apply for more than 100 grants earmarked for children, young people and learning.
But there is evidence that most councils are making use of less than a third of those available to them, meaning their schools could be missing out on thousands of pounds' worth of funding.
The Assembly's finance committee undertook a major inquiry into the system earlier this year, and found that there were too many grants and the application process was too confusing.
But the Assembly government has announced that it now intends to rationalise the range of grants, with some changes set to be put in place by April next year.
A spokesman said: "This will result in fewer separate grant schemes, with simpler administrative and monitoring requirements, to support the delivery of key education outcomes. This project is still at an early stage of development, and we are in discussion with local government and the further education sector in Wales.
"Proposals would be subject to consultation with stakeholders, and we are not yet at the point where we can say what will be done by when, but we expect some changes to be in place for the coming financial year (201011)."