The fund could be worth �1,410 in 18 years

Phil Willis says the plan to invest up to �500 on behalf of children will be dwarfed by the rising cost in university tuition fees.

Children will not be able to withdraw the savings until they are 18.

It is available for children born since September 2002 - and vouchers will be sent to 1.7m families.

The Child Trust Fund, launched on Tuesday, will invest at least �250 on behalf of children, which will then be available for them when they become adults.

'Mortgage-style bill'

Children from low-income families will have �500 invested - and if that achieves 7% annual growth, it will become �1,410 in 18 years.

There will be an additional payment made by the government when a child reaches the age of seven - with the amount still to be decided.

Parents, relations or friends will be able to top up tax-free trust funds up to a limit of �1,200 per year.

But Mr Willis says that this amount given by the government will be swallowed by the much larger amount that 18 year olds will be charged in tuition fees - which by next year will be �3,000 per year in most universities.

"For those who choose to go to university it is a particularly hollow gesture as the government will give them a few hundred pounds in cash and at the same time a mortgage-style bill in tuition fees," said Mr Willis.

Instead, Mr Willis argues that the money should be put into education for young children.

"Children well cared for in their early years have the best chance of living fulfilled lives. The �1bn spent on Child Trust Funds should be spent when children need it most. This means reducing class sizes for the youngest children to provide better education for every child - when it counts," said Mr WIllis.

"The Child Trust Fund is expensive, unnecessary and locks up much needed resources."

'Culture of saving'

The government has said that the investment will help to develop a "culture of saving" for young people - and it will encourage schools to improve children's financial literacy.

"Every child in a class will have one, so schools will be able to cover itand build children's financial capability. I think that is going to be a veryimportant benefit," said Treasury minister, Stephen Timms.

Mr Timms also said that he wanted every young person to have a "worthwhile financial asset" at the age of 18.

"There is very good evidence that even a modest sum available at that very critical point in a young person's life can make a very big difference to their life chances for the future," he said.