Fears are growing for the future of state-maintained nursery classes as changes to funding leave their budgets slashed.
It has become apparent that the reforms could result in them closing their doors or cashflow dwindling to a point at which it is no longer viable to employ nursery nurses alongside qualified teachers.
The changes have been prompted by a government demand in June 2007 that local authorities bring in a single system of funding for all pre-school settings by April 2010. Specifically, schools are to be funded for actual pupils attending rather than per place available. Previously, they were often funded for places before they were filled.
Among those already feeling the impact is Lillington Nursery School in Leamington Spa, Warwickshire, which closed at the end of last term. Nursery classes have now been transferred to the primary school on the same site. A report to the council's cabinet last year stated that "proposed changes to the way nursery schools are funded ... may result in an adverse effect on Lillington Nursery School".
A Warwickshire County Council spokesperson said it "was not looking to close early-years settings and will continue to support providers in developing business sustainability".
"We are hopeful that our proposals to implement the legislation will minimise this risk for providers, but we will know more once our consultation opens next month.
"The decision to merge the nursery and primary schools in Lillington was based on a number of factors. The schools' proximity helped facilitate the merger, which has been very successful, and bringing the settings together has resulted in one, more financially robust school."
The Government has said it recognises that maintained nursery schools are more expensive to run than other state provision and claims the change is not intended to threaten their viability.
But it admits that state nurseries that are not full all year round will have "more volatile" budgets than at present. It adds that nurseries will, as now, be able to charge parents for time beyond the free early-years entitlement.
Megan Pacey, chief executive of Early Education, a charity that works across all early-years sectors, said the effect of the funding changes were not uniform.
Ms Pacey said: "To date, the impact is presenting a very mixed picture. Settings are only now starting to explore its implications, and the impact of the formula appears to differ enormously, depending on your local authority and the type of setting you are.
"The next few months are crucial to understanding how this will unfold."
But some teachers are already concerned about their jobs.
One teacher in the North East said: "The gut feeling from the local authority meeting I went to was, unless maintained schools are going to make up the shortfall, then schools won't be able to afford to run the nursery ... There doesn't seem to be any way around getting funding for it.
"I am a trained teacher so I am able to go anywhere, but that is not the point. I can teach in any year, but I want to teach nursery."
John Bangs, head of education at the NUT, said: "I think it is very dangerous. My argument would be that nurseries should be funded at a level which allows qualified teachers (to be employed)."
A government spokesperson said: "The aim is to help ensure that while funding levels are not necessarily equal, they are efficient, equitable and transparent.
"The single funding formula is not about trying to close any type of provider and allows for unavoidable costs - for example, a headteacher in a maintained nursery school - to be recognised."
Six local authorities - Croydon, Hertfordshire, Leeds, Rochdale, Somerset and Southampton - began piloting the funding changes in 2007. Since then, Derby, Greenwich, North Somerset, North Yorkshire and Shropshire have also joined the pilot programme.