Children with special educational needs (SEN) could get their own pupil premium-style payment as part of radical changes that would give parents, not schools, more control over funding.
The Department for Education is considering giving SEN pupils grants that follow them wherever they are being educated.
However, SEN groups have said the changes would not help vulnerable children and their families, and have warned that they could result in schools losing funding. Currently, resources for SEN pupils largely come in the form of extra local authority services.
The idea of a "price" being put on each child with SEN was first suggested by the last Conservative SEN review, led in 2005 by Lord Lingfield, formerly Sir Robert Balchin. He called for funding to be given to pupils according to the severity of their condition.
Lord Lingfield also suggested that each disability should be worth a sum of money and that parents should be able to choose where their children were educated.
Children's minister Sarah Teather and her officials are now considering whether the proposal should be included in the SEN green paper, due out in April.
Lorraine Petersen, chief executive of the National Association for Special Educational Needs, said: "This might sound attractive to families, but in reality most parents do need support and help to make the right decisions about the complex SEN system. I worry this system would penalise the most vulnerable."
Jane McConnell, chief executive of the Independent Panel for Special Education Advice, said the Government should be cautious about reforming SEN funding.
"There is a reason children with special educational needs are not a perfect commodity. If the aim is to make them more attractive to schools so heads accept them on to their rolls, then it won't work, because schools are going to be judged even more on their exam results," she said.
Currently, children with SEN who are without a statement are put in one of two categories: school action, and school action plus if they have more severe needs and require support from other professionals as well as teachers.
Department for Education officials think this system is too bureaucratic and want to scrap it. It is likely to be replaced by simpler "pupil profiles". It is not clear if schools will lose the funding they currently get for school action plus pupils.
The existing methods of SEN assessment will be overhauled, with a new role for educational psychologists. The green paper will also introduce mediation for parents unhappy with their child's support, instead of the current legal process.
More than 2,000 parents, teachers, SEN groups and teaching unions have given evidence to Ms Teather and her civil servants. The green paper was supposed to be finished last September, but was delayed until after the DfE and Department of Health white papers had been released.
According to the Association of School and College Leaders, the green paper should overturn rules that say SEN co-ordinators must be teachers. "Their role is with the school, not with the child," said general secretary Brian Lightman. "We don't mean children with SEN should not be taught by a qualified teacher."
GREEN PAPER - WHAT'S IN STORE
The Government is set to unveil its green paper - the first step on the route to legislation - on SEN in the next few months. It is expected to:
- introduce major reforms of SEN funding;
- introduce changes to teacher training;
- give more details about how special school academies and free schools will work;
- introduce mediation for parents who are unhappy with their child's support.