Right-wingers in the Conservative party are pressing for a manifesto that directly appeals to middle-class parents by offering a form of voucher that can be redeemed in state schools.
The latest advocates of vouchers believe parent power would lead to a new generation of grant-maintained grammar schools set up by private organisations attracted by an assured income.
The Education Secretary, Gillian Shephard, is facing strong right-wing pressure to produce a radical scheme that will prepare the ground for a manifesto commitment on vouchers.
Support for vouchers as a manifesto promise has re-surfaced on the Right because the scheme being examined would not imply a subsidy to the independent sector. Unlike the Government's nursery scheme, there will be no actual paper voucher. Instead, it will devolve 100 per cent of the cost of a child's education to schools. For the scheme to succeed, the Treasury would have to abandon its requirement that new schools cannot go ahead unless there is evidence that places are needed.
Right-wing Tories believe the strategy would wrong-foot Labour in the election campaign because of the decision of Harriet Harman, the shadow health spokeswoman, to send her son to a grant-maintained grammar school, despite the party's opposition to selection.
Preliminary measures to increase selection in schools are promised in a White Paper from Mrs Shephard due next month. In a BBC interview on Sunday, Mrs Shephard suggested the proposals may fulfil the Prime Minister's ambition to establish a grammar school in every town.
However, any scheme for grammar schools will require ministers to take a view on where they are to be sited in order to ensure they are not competing with other selective schools for academic pupils.
Ministers have yet to decide the basis on which to approve schools, but the Prime Minister is insisting that the Government be seen to be responding to parental demand. Mrs Shephard has said only that schools may be allowed to select up to 50 per cent of their intake.
The White Paper could suggest grammar schools might get the go-ahead after a survey of parental opinion or in areas where parents present a case for selection.
According to the latest figures from the Department for Education and Employment, 12 per cent of places in secondary schools are empty. Overall, there were some 883,000 surplus places in 19945.
There is a view on the right of the Conservative party that Mrs Shephard is reluctant to pursue radical measures that bring electoral advantage. In public, Mrs Shephard makes clear that she sees grammars as only one strand in the Government's policy of creating diversity in schools.
The divisions over policy reflect the growing concern among MPs that the Tories have to act decisively to win the next election. The Right see the promise of a return to grammar schools as a vote winner.
Influential Tories want to exploit Labour's policy of ending selection in schools by pointing out that a handful of Labour MPs send their own children to grammar schools.