In a letter to the teachers' pay review body, Education Secretary David Blunkett says none of the estimated 2.9 per cent real terms increase in local education authority budgets next April should be used for teachers' wages.
"You will be aware that [we have announced] extra spending power for local authorities. This was provided in recognition of the pressure on school budgets next year. It is essential that none of this additional capacity is eroded by the overall pay settlement," he says.
However, ministers are understood to accept that councils will be able to afford a rise of just under 3 per cent, slightly higher than inflation. And the review body is unlikely to be bounced into setting a particularly low figure, just because teachers who cross the new performance threshold will receive a pound;2,000 rise.
Average earnings in the public sector have risen by about 4 per cent over the past year.
In the letter to Tony Vineall, the pay body's chairman, Mr Blunkett says some local authorities would find a "pay award much greater than inflation very difficult to handle", naming Sunderland, Newcastle and Middlesbrough as authorities where the total extra cash for education next year is little more than 3 per cent.
And he warns that pay rises which are not "affordable" will have to be phased.
Graham Lane, the Local Government Association's education chairman, welcomed Mr Blunkett's intervention on the employers' side. But union leaders bitterly criticised what they claimed was a crude attempt to undermine the pay review process.
Doug McAvoy, general secretary of the National Union of Teachers, said: "The review body should be allowed to recommend what it believes is necessary. The Government should not be using blackmail in its communications with the review body to constrain its honestly held beliefs."
Nigel de Gruchy, general secretary of the National Association of Schoolmasters Union of Women Teachers, said: "The Government's criterion of affordability appears to be what it has previously decided local authorities should receive."
David Hart, general secretary of the National Association of Head Teachers, warned that the Government's stance could threaten its pay reforms. His union would be pressing for an across-the-board rise for heads of at least 10 per cent, regardless of performance.
It is in the Government's interest to keep down the pay bill so that local authorities are able to take part in its standards funds projects most of which have to be match funded
If Mr Blunkett has his way, teachers seeking a significant pay increase next year will also have little option but to co-operate with his performance-related pay plans and the accompanying promises of rises of about pound;2,000 for those passing the "threshold" to senior teacher status.
Less experienced teachers, unsuccessful "threshold" applicants, and those who refuse to take part in performance-related pay will just get the annual rise.