Schools and universities are to receive �11.9bn extra, as education is among the biggest winners in the government's review of public spending.

Chancellor of the Exchequer Gordon Brown announced in his Comprehensive Spending Review that the education budget over the next four years would increase by an annual average of 6.6%.

Gordon Brown: "Tying new resources to reforms and results"

This will mean that by 2004, schools in England and Wales will be receiving �700 more per pupil than when the government entered office in 1997.

The extra funding will include �540m to be directed straight to head teachers, by-passing local authorities - which the government has previously accused of wasting money on red tape.

Secondary heads by 2004 will receive up to �70,000 directly, in addition to local authority funding, with primary heads receiving up to �20,000.

Education targets

85% of 14 year olds to be proficient in literacy, numeracy and IT by 2007 Majority of young people to enter higher education by 2010 60% of 21 year olds to have A-levels by 2004 Extra 80,000 more 16 to 18 year olds in education by 2004 500,000 more computers in schools by 2004

But the Shadow Chancellor Michael Portillo rejected the direct funding announcement, challenging the government to give more of the education budget straight to head teachers.

"Here we have a government giving little tit-bits directly to schools. Why doesn't it give the vast majority of the money directly to schools as we propose to do?"

Promising a "radical improvement in the comprehensive system", the chancellor announced that secondary schools are to be particularly targeted for extra funding, with the government now wanting to see the improvements in test and exam results that have been achieved in primary schools.

Asserting that the government would be "tying new resources to reforms and results", Mr Brown announced new targets for improvements in test results for 14 year olds and higher exam targets at GCSE.

University elitism

By 2007, the chancellor said that 85% of 14 year olds would have to be proficient in literacy, numeracy and the use of information technology.

Young people are to be encouraged to stay on in school, with a target set for 60% of 21 year olds to have A-levels or their equivalents by 2004.

Universities are to receive extra funding of �100m for 2001-02, representing a 4.6% increase - countering university chiefs' fears of real-term cuts - including �50m ring-fenced for preventing the "brain drain" of leading academics.

�20m will be available for projects widening access to universities

There will be �20m available through university funding councils to encourage a widening of access into higher education, with schemes such as summer schools and outreach projects.

This investment follows the accusations of elitism in leading universities, made by the chancellor himself, in the wake of the Laura Spence case, in which a state school pupil was rejected from Oxford University but was offered a scholarship by Harvard.

By 2010, the chancellor promised that there would be a majority of young people entering higher education.

School sport

The chancellor also raised the prospect of an increase in spending on school sport, when he announced that the Department for Media, Culture and Sport was to receive extra funds to widen participation in both the sports and arts - particularly in schools.

The expansion of pre-school places is set to continue with the promise of �200m investment in childcare.

The Education Secretary David Blunkett, who is expected to give further details on spending allocations on Wednesday, hailed the funding announcement as "the biggest investment in education for at least 20 years".

And he said that passing money to schools would "make a real impact in classrooms. I know heads welcomed the direct funding earlier this year and the freedom it has brought".