The prospect of a Conservative manifesto that pledges backing for self-governing schools in competition with local authorities dismays some senior party figures who want all secondaries to become grant-maintained.
Radical plans for measures that would allow parents, teachers or other groups to set up new schools have been under discussion between Conservative Central Office and the Number Ten policy unit for some months.
However, its detractors believe few independent groups have the skills required to run schools. The Funding Agency for Schools has yet to use its existing powers to recommend state funding for a new grant-maintained school to be run by independent promoters.
Within the grant-maintained sector, the pressure is for a manifesto that would promise a much reduced role for local education authorities with all secondary schools funded directly by central government.
The idea being "market-tested" is that "charter schools" would be given basic state funding according to the number of pupils, but they would be encouraged to top this up with finance from local businesses and voluntary organisations.
The scheme could provide an opportunity for enterprising teachers and parents in areas where schools are considered to be inadequate or in rural areas where schools have closed as the population declined.
Eric Forth, minister of state at Education and Employment, has studied a similar scheme during a visit to the United States, where charter schools have been created in areas which had lacked good schools.
Ministers are being urged by the influential think-tank, the Social Market Foundation, to intensify competition between schools by encouraging private providers of schools.
The foundation believes teachers could be encouraged to take a financial stake in schools if they were given greater control over teaching method and curriculum - a scheme that mirrors fund-holding in GP practices.
The problem for the Government is that the Audit Commission is highly critical of the way the market currently operates in schools. In its last report, it says the lack of planning in the supply of schools, brought about by the creation of the grant-maintained sector, is producing a wasteful mismatch between pupils and places.
In the final stages of drafting the manifesto, the Prime Minister and colleagues may decide voter appeal lies more with promises of providing greater choice in existing schools. The Education Bill going through the House will allow grant-maintained schools to select up to half their pupils and provides for schools to appeal to the Education Secretary over the heads of local authorities in cases where they want to become grammar schools.
David Blunkett, Labour's education and employment spokesman, dismissed the idea of charter schools. He said: "After 17 years in government it is an appalling admission of failure that the Government is now looking to parents and teachers to set up their own schools rather than offering the country a good education system for every child."