Ministers appear to be near agreement on a “bidding” system, run by a quango or the Department for Education, which would be set up to create new places, probably on a regional basis. Local authorities, playgroups and the private sector would compete for extra money or start-up capital. While such a market system could force costs down, bidders would have to reach a quality threshold.

According to a report in last week’s Sunday Telegraph, which appears to be based on senior ministerial sources, the Government hopes funds will be transferred into a voucher system once sufficient places have been created. This could take several years.

Parents, charities and LEAs would be free to top up the voucher. If the plan goes through, legislation would be needed, with implementation unlikely before the next General Election.

A DFE spokesman said there was no one proposal, and all options remained open. He confirmed that such a plan was among the options, however.

While more than 90 per cent of four-year-olds are already in either nursery schools or classes, reception classes or private schools, and only about 5 per cent are thought to have no pre-school or education place, distribution is uneven.

A careful reading of the Sunday Telegraph story suggests a victory for Education Secretary Gillian Shephard, who “has forcefully argued that vouchers will not work until an infrastructure of nursery schools is in place”.

But Tuesday’s Daily Mail, decribed the decision to give parents of four-year-olds vouchers as a “significant victory for the Tory Right and the Treasury over the initial reservations of the Education Secretary Gillian Shephard”.

The Mail adds: “Her one condition is that, before the plan is introduced, there will be a full-scale campaign by her department to ensure there are enough places.” This might sound to well-informed readers like a bidding system.