Ministers are warning councils that extra spending intended for schools should not be diverted into social services or other hard-pressed areas.
Stephen Byers, the school standards minister, admitted this week the Government has no powers to direct local spending, but he told MPs on the education Select Committee that parents would voice their opposition if the money did not reach schools.
The Government expects that an extra #163;1.1 billion will be spent next year by local councils on education - a rise in real terms of about 3 per cent.
The Department for Education and Employment says provision per pupil for local authorities should rise by #163;135 to #163;2,735.
The problem for ministers is that councils are already spending around #163;400 million above their standard spending assessment for education and they are not obliged to pass on to schools the full percentage increase set for next year.
Research by the National Union of Teachers suggests that only a proportion of the #163;840 million earmarked for education this year got into school budgets.
The union's survey of 33 councils found that the average increase in school budgets was 3.4 per cent, rather than the 5.7 per cent assumed in the settlement.
The latest figures assume that #163;20.5 billion will be spent by local councils on education in 1999-2000, but the total spending on schools cannot be calculated until ministers announce figures for the standards fund in autumn.
Councils are to get grants to cover the cost of reducing the size of infant classes and to pay for early-years development plans.
The uncertainty for schools is compounded by new rules on the amount local education authorities have to delegate to schools from April next year. Authorities must submit education development plans detailing projected spending on school improvement to the Department for Education and Employment.
Apart from school improvement funds, the only other money held centrally will be to cover administration and special education needs, unless schools want services to be run by the local authority.
In addition, ministers have yet to take decisions on a range of options produced by the working group that has been reconsidering the method of calculating councils' grants. The outcome is likely to mean a redistribution of funds away from London.
According to Tony Travers, local government specialist at the London School of Economics, pupils in secondary schools and primaries without large classes are unlikely to see very much of the extra funding.
"It may even be that pupil: teacher ratios in secondaries will worsen because pupil numbers are rising," he said.
"Most of the money is being carefully targeted. It is intended to expand provision. Lots of people in education think they are going to get a share,but these expectations may not be fulfilled."
The temptation for local councils not to pass on the full 5.7 per cent increase is greater this year, Mr Travers said, because education has for several years been treated more generously than other services.
David Blunkett, the Education and Employment Secretary, is appealing to Don Foster and David Willetts, the Liberal Democrat and Conservative education spokesmen, to sign a letter intended to pressure councils not to spend money for education on other areas.