The move is part of a wide-ranging reform of the school funding system designed to give schools “unprecedented financial security and freedom”.

Three-year budgets will be introduced from September 2006 in an effort to give headteachers greater certainty about future funding levels.

Additionally, a single school improvement grant will replace more than 60 existing central-government funding streams, including money for flagship projects such as Excellence in Cities and grants for 14-19 vocational training. However, the ethnic-minority achievement grant will continue in its current form. Details of the proposals were expected to be announced on Thursday after The TES went to press.

Critics have warned that replacing existing standards-fund grants could create winners and losers and that the end of Excellence in Cities funding will hit schools in deprived areas.

But a government spokesman said: “People are not going to be short-changed.”

Minimum increases were introduced after complaints of a schools funding crisis during 2002-3.

In 2005-6, primary schools will receive a minimum of 5 per cent extra per pupil and secondaries will get 4 per cent.

Ministers first announced the changes in July last year. An Audit Commission report published the same month warned that minimum guarantees are an “inefficient use of resources”.

In December, the education select committee accused ministers of “incredible short-sightedness”, warning that a minimum guarantee would make it harder to put resources where they are most needed.

Ministers argue that the changes, which are supported by heads, will strike the right balance between stability and effective targeting of resources.

They have resisted calls for a national funding formula. Money will continue to be channelled through local authorities, but a separate funding stream for schools’ budgets means councils have to pass the money on to schools.