Every school will receive a minimum funding increase of around 4 per cent per pupil next year, the Government will announce later this month.

The guarantee will be the centrepiece of a funding package that ministers hope will prevent a repeat of this year’s crisis and avert politically damaging teacher redundancies in the run-up to the next general election.

Other measures are expected to include additional help for schools in severe financial difficulties and tighter limits on how much money councils can retain centrally.

Education Secretary Charles Clarke promised in July that all schools would receive an above-inflation increase in per-pupil funding in 2004-5, and that pound;400 million due to be cut from the standards fund would be retained.

The guarantee will be worth approximately pound;22,000 to the average primary and pound;110,000 to the average secondary school with steady rolls.

The pound;400m will be distributed in the same way as in previous years, although schools will be given more freedom over how it is spent.

Critics warned that a 4 per cent real-terms increase will be insufficient to meet rising costs.

A report by consultants PricewaterhouseCoopers for the National Union of Teachers, published last month, said that there was insufficient money to meet rising costs.

It suggested that primary schools face a shortfall of pound;200m next year and secondary schools a deficit of more than pound;50m. This gap will increase even further if teachers are awarded an above-inflation pay rise.

The announcement of next year’s funding strategy was expected this week but has been delayed by a last-minute row between local authorities, heads and classroom unions over how the guarantee should be delivered.

Council leaders fear that in their eagerness to ensure that money gets through to schools, ministers will put in place a system which will penalise schools with falling rolls and high numbers of pupils with special educational needs.

Teachers and heads are keen to ensure that councils are given a single set of rules on how to distribute the money.

Heads are also pressing for changes to the proposals to ensure that small schools’ budgets do not fluctuate wildly as a result of changes in pupil numbers.

The guarantee is expected to apply only to schools’ core budgets, not to the standards fund or to money retained by local authorities for school-based spending, such as that for pupils with special needs.

Graham Lane, Local Government Association chair of education, said: “If local authorities cannot choose the funding option which is appropriate to their schools then there could be some rather spectacular losers.”

He admitted that heads do not trust councils, but warned that spending on services such as school improvement and home-to-school transport could also be hit if councils are forced to pass on too much money to schools.

David Hart, general secretary of the National Association of Head Teachers, said: “If Charles Clarke gets this one right then in one bound he will be free of funding problems. But if he gets it wrong there will be severe political consequences.”

John Bangs, National Union of Teachers head of education, said: “Whatever the Government does, somebody is going to lose out unless more money is put in the system.”

He said he supported council leaders’ calls for local schools’ forums, set up by the Government last year, to have more say in how money is distributed.