The warning comes as the government prepares to "name and shame" local education authorities (LEAs) that are failing to pass on the additional money to schools.

The Education Secretary, David Blunkett, has told councils that he will consider removing their powers to determine local education spending if they continued diverting cash to "roads and ice rinks".

But ahead of the detailed government statistics on how LEAs spend their money, the heads of grant-maintained schools say their schools are receiving �60m less this year than they should be.

A survey by the Grant Maintained Joint Monitoring Group suggests that about 800 schools are operating on a budget that is the same as last year.

'Armies of bureaucrats'

The headteachers argue that this shows that LEAs which received 5.7% more funding from the government to raise education standards are passing on none of it to some of the country's best schools.

Pauline Latham, chairwoman of the Grant Maintained Schools Advisory Committee, said the money was going to pay for fresh armies of bureaucrats and advisers.

"LEAs say the government is requiring them to implement new plans to raise standards, and they need new people to do it," she said.

"But when Stephen Byers was an education minister, he assured us this would all be done by existing staff in town halls."