Teachers will not get a salary top-up to compensate for the rising cost of living, despite the allowance made for this in their last pay deal.
The statutory body that advises ministers on teachers' pay has refused to review the latest deal, even though high inflation triggered a "reopener clause".
That clause allows the School Teachers' Review Body - with ministerial authorisation - to reconsider the pay deal if the retail price index tops 3.25 per cent. This week, it hit 4.6 per cent.
But Bill Cockburn, in one of his last acts as chairman of the body, wrote to unions this week saying he would not seek to reopen the deal.
"It is clear that teachers have experienced higher increases in living costs than were expected when the pay award for the current period was settled," he admitted. But there was no sign that the effective pay cut was causing teacher shortages.
And because the prospects for economic growth were "gloomy", he said teachers' pay would remain competitive, with other professions also receiving below-inflation rises.
Inflation in the 2006-08 pay round has been higher than at any time since 1991, outstripping teachers' pay rises.
The refusal of ministers and their advisers to revisit the pay settlement will further anger some teachers who took strike action in April in protest at a second below-inflation pay deal for 2008-11.
Mr Cockburn sparked a public row when he told The TES in April that striking teachers would lose the "great respect" they had earned.
Christine Blower, acting general secretary of the National Union of Teachers, hit back last week by raising "serious doubts" about the pay body's neutrality.
The union is considering balloting for further strike action in autumn, and this week's decision will harden some members' resolve.
The Department for Children, Schools and Families welcomed the pay body's decision: "The STRB has considered this request and has decided not to seek a remit from the Secretary of State - which we accept," a spokesman said.
Ed Balls has agreed to increase teachers' pay by 2.45 per cent in September. A proposed 2.3 per cent rise in each of the two subsequent years remains under review.