Mr Salmond said action was being taken to cut class sizes

Party leader Nicol Stephen said the money was being used for improving toilets and car parking.

Speaking during question time at Holyrood, First Minister Alex Salmond said the comments were a "slur".

Under Labour pressure, he said plans to scrap council tax would come out soon, while the Tories pressed Mr Salmond on scrapping the graduate endowment.

Mr Stephen referred to the �40m announced by the Scottish Government for councils to improve school buildings, which Children's Minister Adam Ingram said at the time could be used to pay for work needed to help cut class sizes.

I give my personal assurance that I shall never describe [Wendy Alexander] as a Gruppenfuhrer Alex Salmond Scottish First Minister

Citing documents obtained under freedom of information laws, the Scottish Lib Dem leader told parliament of the cash: "One council spent it on a new boiler, one council spent it on a large-wheelbase minibus, one on a new chemical store, two on staff toilets and one on car parking spaces."

He told Mr Salmond: "These might be worthwhile but they don't match the claims of your government."

Ministers aim to reduce class sizes in the first three years of primary school to 18 or less.

Mr Salmond said there had been "substantial progress" made on the matter across Scotland, pointing out a �9m injection for 300 more teachers this year.

"We will see councils investing in the quality of education for our young people far and above the broken commitments in the partnership agreement signed by Nicol Stephen," the first minister added.

'Fat Bob'

Scottish Labour leader Wendy Alexander accused Mr Salmond of delaying plans for a local income tax and taking 300 days to fulfil a 100-day commitment.

But he said ministers were waiting for every council to set tax for the coming year, in order to show comparisons between amounts raised by the council tax and by a local income tax.

The two also traded past comments made by Labour spin doctors.

Ms Alexander said her latest, Simon Pia, previously described Mr Salmond as "Mussolini, Fat Bob from Our Wullie, and Great Chieftain of the Pudding Race".

Mr Salmond said: "I give my personal assurance that I shall never describe her as a Gruppenfuhrer, as Simon Pia once did."

The first minister also voiced concern over the "reliability" of US assurances on rendition flights and warned it would be a violation of Scottish law if any "torture" flights had landed in Scotland.