The National Union of Teachers says the school funding crisis could deepen because costs will outstrip increasing government investment.

It commissioned researchers to look at 36 schools in six areas.

Researchers at Price Waterhouse Coopers say it is not possible to draw firm national conclusions from the study, but the NUT has seized on the findings.

The primary schools surveyed faced an increase in costs of 16% in 2003-04, 21% in 2004-05 and 27% in 2005-06.

The government has promised a 12.9% rise in education investment in 2003-04 above 2002-03 levels, giving a 3.1% shortfall at primary level.

Investment in 2004-05 was projected to rise to 18.2% over 2002-03, leaving a 2.8% deficit, and in 2005-06 to 23.4%, meaning primary schools faced a 3.6% gap.

Secondary school costs were set to rise 14% in 2003-04, 19% in 2004-05 and 24% in 2005-06.

But that would leave them facing a 1.1% deficit in 2003-04, a 0.8% shortfall in 2004-05 and a 0.6% gap in 2005-06, Price Waterhouse Coopers said.

'Dramatic problem'

The union said that if those figures were repeated across England, the shortfall between primary school income and costs would be �256m in 2003-04, �231m in 2004-05 and �297m in 2005-06.

Secondary schools faced a funding gap of �97m in 2003-04, �71m in 2004-05 and �53m in 2005-06.

General Secretary of the National Union of Teachers Doug McAvoy said PWC had been cautious in their assumptions but the evidence pointed to a "dramatic problem arising from a massive shortfall in funding for our schools".

"The government has urged raiding other areas of school funds to deal with this year's problems. That only deepens the difficulties for the future.

"Some schools have set deficit budgets but those debts have to be repaid.

"Our schools cannot afford to live on borrowed money. There can be no borrowed time for children's education."

The study was based on schools in Birmingham, Brighton and Hove, Durham, Essex, Hammersmith and Fulham in London and Wiltshire.

The government said the research was too small to paint a representative national figure. A spokesman said: "Spending is up by nearly �800 per pupil since 1997, and will be up by more than �1000 per pupil by 2005-06.

"In addition to this record investment we have set out a funding framework for the next two years to build confidence in the funding system and are putting in an extra �400m to reverse planned cuts in standard fund grant in each of the next two years.

"We are determined to give head teachers more stability and predictability in planning their budgets and are working hard with them and local education authority representatives on arrangements for 2004 - 05. "

Shadow education secretary Damian Green said the figures were very disturbing.

"Clearly the government made a huge mess of school funding this year, and has not yet told parents and teachers details of how it plans to avoid a similar crisis next year.