Teachers in Manchester may have been massaging pupil attendance records and marking truants as present, new figures show.
A report by the city council suggests that figures in school registers were "inflated" to make it appear that attendance was improving in some schools.
Manchester has the highest rates of authorised absence in England, with 10 per cent of pupils supposedly legitimately absent in some schools.
Education officials in the city launched an investigation in the spring amid concerns about the marking of registers. An audit was carried out and the report was published this week.
The report discovered "practices in some schools where registers show pupils to have been present when they should have been marked absent, thus inflating reported levels of school attendance".
"At the same time it is clear that absences are being authorised by some schools without sufficiently rigorous checking, leading to artificially low levels of unauthorised absence and making it impossible for the education welfare service to act," it says.
The report blames a government and city council focus on unauthorised absences for creating a "perverse incentive" for schools to give permission to children to miss lessons.
It goes on: "The auditors found generally inconsistent practices, often not following the existing guidance from the department's education welfare service."
Manchester's education service was deemed to be failing following an inspection by the Office for Standards in Education in 1998, with poor attendance rates featuring prominently in the list of criticisms.
Since then several initiatives have been introduced to improve attendance, including improved home-school liaison, counselling and mentoring schemes and better pastoral care.
National figures indicate that the Government will miss its target of reducing school truancy between 2002 and this year by 10 per cent . Figures released in February suggest that some 50,000 children miss school each day without good reason.
A spokeswoman for Manchester city council said officers were considering the report.
"There appears to be some discrepancy over how long registers are left open in the mornings and we will be tightening this up so that every school uses the same procedure," she said.