The gap with England has been disputed

But there is now a 4% gap between Wales and England - with average spending in Wales of �2,148 compared with �2,247 across the border.

There are also large spending variations between the Welsh unitary authorities - with some spending considerably less than others.

Under the current funding formula, the situation could become worse, according to the IWA report.

Professor Reynolds's investigation described the differences in education expenditure as "worrying".

"Recent spending announcements from the National Assembly do nothing to eliminate the discrepancy," he said.

"In Wales, you have factors such as older buildings and an older teaching force, which costs more per head.

"The scale of the Welsh underspend is so serious as to prompt real fears that Welsh schools can achieve the targets set for them, in both primary and secondary education," added Professor Reynolds, from Exeter University.

Local variations

For pre-school children, Wrexham spends �800 less per head than the Welsh average.

Blaenau Gwent council's expenditure on pupils above the age of sixteen is a full �500 lower than the mean figure for Wales.

Blaenau Gwent's schools perform worst of all Welsh education authorities in terms of their students' GCSE results.

In his report, Professor Reynolds also calls for more distinctive Welsh education policies as well as adopting the best practice from across the border.

In particular, Professor Reynolds believes that literacy and numeracy schemes in England should be implemented in Wales as soon as possible.