It issued 670 application forms after advertising for private companies, not-for-profit organisations and other consortia to bid to take on education services.

Around 100 organisations have said they are interested in becoming consultants, and 107 in taking over all or some council functions. It has also advertised for consultants to advise schools on services to pupils and parents, and responses to inspections.

The Department for Education and Employment wants to draw up a list of organisations that can manage literacy and numeracy schemes, provide pupil welfare, admissions or financial services.

Education Secretary David Blunkett last month refused to rule out a company taking over a failing authority completely. Downing Street is helping to judge which local authorities should be turned over to the private sector and is vetting their education development plans and inspection reports.

Among the bidders are key service providers from the grant-maintained schools’ world. The Centre for Education Management - allied to the GM Schools Centre - is leading a consortium hoping to take over council services. Other members are accountants Chantry Vellacott and solicitors Winkworth Sherwood who have worked with the GM Centre for a decade.

Senior officials from the Funding Agency for Schools - the quango which administers GM finance - are also expected to join the CEM consortium. It is bidding for all services and will be taking a management fee.

The move comes as the 1,197 GM schools prepare for the abolition of their sector in September. The GM Centre, set up 1989 to support opted-out schools, will cease trading in the autumn and rename itself The Foundation and Aided Schools Centre. The York-based FAS will shut in April.

The CEM, formed in 1994, has 10,500 school clients - 3 per cent are independent schools, 30 per cent are from the GM sector and 67 per cent from councils. It provides services such as personnel and financial support directly to 800 schools. Decisions are expected from ministers by April.