The public spending watchdog’s report, Trading Places, last week blamed conflicting Government education policies for placing school planning at risk and warned the system was now close to becoming gridlocked. It said millions of pounds were being wasted annually while thousands of parents were not getting their choice of school .

And the Audit Commission said ministers had to review their policy of allowing schools threatened with closure to opt out if they were serious about tackling surplus places.

The Association for London Government said it had warned ministers and civil servants that reforms were not leading to improvements and were actually preventing councils from meeting the needs of the capital’s children.

Sheila Knight, chair of its education committee, said: “The Audit Commission study has now provided the objective analysis which vindicates the case which we have been making.” She said immediate changes could be made to the approach to opting-out applications, the expansion of GM schools, capital allocations, the definition of school capacity and local powers to plan and manage education.

Chris Waterman, education officer at the ALG, said action had to be taken to restore the confidence of parents in a system which now meant a frantic scramble for places with higher levels of expectancy and disappointment.

“Getting children into schools they want to get them into is a far higher priority than adherence to an inflexible belief in the free market,” he said. ” Local education authorities are desperate to avoid the annual battles with parents over school admissions which the present system seems to encourage. ”

As part of its investigation the Audit Commission found in a survey of five education authorities that around 10 per cent of parents did not get their first choice of school for their children. Nine per cent did not even express a genuine first preference because they believed they would not succeed.

Latest Department for Education and Employment statistics also revealed that in 1995 almost 50,000 parents appealed against the school allocated to their child.

The National Confederation of Parent-Teacher Associations has now called on the Government to provide more money for schools so that parents can be guaranteed that every school is a quality school.

Margaret Morrissey, its public relations officer, said: “Over the past two years, NCPTA has sought a commitment from the Government to address the issue of parental choice but our voice has not been heard. What better time of year for the Government to play Santa Claus and give schools the best Christmas present of all - the resources necessary to give every child the opportunity to reach his or her potential.”