David Blunkett, the Education Secretary, announced to a joint meeting of the Commons health and education committees, that he is consulting on a scheme to make schools pay part of the cost of educating pupils they exclude.

The Government is concerned at the rising number of permanent exclusions, currently 14,500 a year. The consultation with local authorities and trades unions is to gather views on the kind of penalty that could be imposed on schools.

According to Mr Blunkett, schools might lose a sum equivalent to that provided in the school budget for that child, but there is also an argument for a penalty closer to the actual cost of the transfer to another institution.

Mr Blunkett was answering questions on the education of children in care. It is not known how many looked-after children in care end up permanently excluded, but estimates suggest they could be 14 per cent of the total.

The Education Bill will allow schools to refuse admission to pupils permanently excluded from two schools. Mr Blunkett said Pounds 22 million is to be made available for schemes that tackle the problem of disaffected pupils. Another Pounds 59m is being made available to help to deal with excluded pupils.

He told MPs: “We must resist the notion that there are pupils who cannot be taught in mainstream schools and have to be rejected for the sake of the staff.”