Thirteen local authorities are facing a 40 per cent cut in the funding they receive to support ethnic-minority pupils, Jacqui Smith, schools minister, said this week.
A further six face cuts of more than 30 per cent between 2004 and 2007 because of changes intended to focus funding on the areas of greatest need.
Kent, which is one of the most popular destinations for refugees arriving from Europe, is among the worst affected authorities.
Classroom unions said that reductions in the ethnic minority achievement grant in these areas would hamper attempts to raise standards among refugee children and of those who speak English as a second language.
But Ms Smith defended the changes. She admitted that the reforms would create winners and losers, but said they were necessary to ensure a "better targeted, fairer and more sensible distribution to this grant".
Ms Smith said that funding is set to increase by almost pound;10 million during the next two years.
Total funding for the ethnic minority achievement grant (EMAG) this year is pound;169m.
Deng Yai, policy adviser for the Association of Teachers and Lecturers, agreed that the funding changes would lead to money being distributed more fairly .
However, he said said that the Government's dispersal scheme - where refugees are moved away from the South-east - meant that different areas were receiving the children.
"It is important to ensure that schools in these areas get funding to meet their needs," she said.
John Bangs, head of education and equal opportunities at the National Union of Teachers, said: "This will cause real problems. The Government should have provided extra funding help for those authorities which will lose out under these changes."