Reception class children could be thrown out of school with no right of appeal if they do not have their Pounds 1,100 nursery voucher when the scheme goes nationwide next year.
Ministers have given local education authorities new powers to make the presentation of a voucher a condition of a place in a reception class - the official point at which children start school.
Civil servants have told councils that schools will be able to withdraw a child's place if parents refuse to hand in a voucher within two weeks of the start of each term. Until now, schools have been able to refuse admission to reception classes only if children do not meet admissions criteria published by the local authority or if pupil numbers already exceed limits.
The new power is contained in the 1996 Nursery Education and Grant-Maintained Schools Act. LEAs will be expected to "make every effort" to consult parents if they want to use the new power and make it clear in admissions literature that reception places are dependent on vouchers.
The Department for Education and Employment said there would be ample time for schools to implement the change by April, when the voucher scheme goes national.
The change was criticised by Alan Parker, education officer with the Association of Metropolitan Authorities. "This rather undermines the principle of education free at the point of use," he said.
Michael Edwards, county education officer for Norfolk, one of four local authorities involved in phase one, said: "The thought of a child going into school and then being oiked out is unacceptable."
Paul Robinson, director of education in Wandsworth, London, another pilot authority, said: "Morally it would be very difficult to deny a child a place if they were already in school."
Both men felt it unfair to penalise a child simply because their parents had not surrendered a voucher. They stressed the importance of schools being able to apply for a voucher on the parents' behalf. Of the 14,711 vouchers issued in the four pilot authorities - the other two were Kensington and Chelsea and Westminster - 300 were obtained this way. Ministers have now agreed to extend that special arrangement for the first year of the national scheme and there will be no limit on school applications.