Millions of nursery vouchers were issued to parents throughout the country this week, prompting protests from politicians and playgroup campaigners that the scheme was destroying places for under-fives.
Labour and the Liberal Democrats called the nationwide scheme a bureaucratic nightmare and a cash-for-votes bribe as vouchers would be dropping through letterboxes only weeks before the general election.
Meanwhile, the Pre-School Learning Alliance claimed children were being crammed into reception classes by authorities wanting to cash in on the scheme.
This week, it called for a Pounds 50 million investment in nursery education to give all children high-quality pre-schooling. The charity, which represents 20,000 pre-schools in England, spoke out as booklets each containing five nursery vouchers were sent out to 500,000 parents.
The vouchers, worth Pounds 1,100 a year or Pounds 366 a term, will be used from April in playgroups, state andor independent nurseries or schools to pay for sessions of at least two-and-a-half hours a day.
The PLA urged present and future governments to prevent primary schools from putting pressure on parents to send their children there and to set out minimum standards for staff-child ratios for all four-year-olds.
It has already claimed that 700 pre-schools are likely to close when the nursery voucher scheme goes nationwide in April, leaving about 20,000 three-year-olds with nowhere to go.
Margaret Lochrie, chief executive of the PLA, said: "Nursery vouchers will help low-income families to afford the costs of pre-school education but, by themselves, are unlikely to create the expansion that is needed.
"Already we are seeing places for under-fives destroyed as the direct result of the Conservative party's experiment with education vouchers, aided and abetted in this instance by Labour and Liberal Democrat councils as they fill up already crowded reception classes with children who are not yet ready for school."
In Norfolk - one of the four authorities that piloted the scheme, along with the London boroughs of Wandsworth, Westminster and Kensington and Chelsea - six playgroups closed last July, compared to the normal two closures per term.
Research carried out by the Department for Education and Employment in the four pilot areas showed that 91 per cent of parents redeemed the vouchers. Of those, 97 per cent of the four-year-olds attended five half-days and 84 per cent three half-days.
Statistics provided by the Department for Education and Employment and Capita, the agency administering the scheme, showed that 55 per cent of vouchers were redeemed in local authority nursery and reception classes with playgroups. Just 4 per cent of vouchers issued in the summer term in the four pilot authorities were cashed in at voluntary and private playgroups.
In a report released this week, the PLA said the Government had to recognise the importance of the voluntary sector and give priority to families in financial need. The charity said a Pounds 50m investment would provide free places for 27,000 of the most needy three-year-olds in a year, create 8, 500 new places in 250 new nurseries and provide more training for staff and parents.
The Campaign Against Vouchers in Education wrote to all local authorities to find out how much they had spent on putting the scheme into place. It is also planning a "dump a dolly on Gillian Shephard" campaign during a lobby of Parliament next month.
* Parents who work in playgroups worry less about their children's development and are less competitive about their children's development, research reveals.
The research, funded by the European Year of Lifelong Learning, was conducted by the National Organisation for Adult Learning for the Pre-school Learning Alliance.
It shows that adults who worked with under-fives gained confidence in parenting and were often encouraged to embark on a career change involving working with children.