THE Government was last night on collision course with local education authorities following fresh claims that schools were being short-changed by hundreds of millions of pounds.

Education Secretary Charles Clarke produced figures showing that more than £30m of Government cash had not been passed by LEAs to schools in the North-East and North Yorkshire.

The figure - part of £590m said to be "missing" nationally - led to renewed threats from officials that LEAs could be stripped of their power to distribute money.

But last night, education authorities in the region hit back accusing the Department for Education and Skills (DfES) of "mischievous and misleading" claims.

And angry teachers claimed the profession was in crisis and said schools were having to cut jobs because of an impending "black hole" in their budgets.

Up to £4.9m is yet to be allocated to schools in Darlington and County Durham education authorities - a figure which could pay for almost 200 full-time teachers.

A spokesman for the LEA in County Durham said: "Far from short-changing schools ,we have passed on everything we should have plus an additional seven per cent, amounting to an extra £1.45m."

He added that the DfES was playing on the complexities of the funding system to present figures in a "mischievous and misleading" light.

Robert Schopen, a spokes-man for Gateshead Council, said £2.5m of funding which it had yet to allocate was from the Government's Standards Fund designed to pay for special projects in selected schools to raise standards.

It had yet to approve plans on how the money would be used, but when it did it would be passed on straight away.

Mr Schopen said: "This was always the plan from the start.

"This money would not and could not have been kept by the council."

He added that the authority had actually got £1.3m less from the Government for schools because of a change in the way its grants was calculated this year.

The NUT's County Durham divisional secretary, Trevor Blacklock, claimed that money promised by the Government was not actually being given to the LEAs.

Mr Blacklock, who teaches at Hermitage Comprehensive School, in Chester-le-Street, said: "Heads are having to run a very tight ship as far as school budgets are concerned and this only seems to be getting worse."

The DfES figures for 2003-4 budgets showed that 19 LEAs were not "passporting" the full increase in education resources they received from Government into their full budget.

Forty per cent of authorities were diverting more than £1m from revenue budgets into capital spending.

Mr Clarke said that LEAs now had ten days to explain to the Government why they had yet to allocate these sums.

David Hart, general secretary of the National Association of Headteachers (NAHT), which is holding its annual conference in York this weekend, claimed that not only had the Government failed to put in up to £500m that schools needed this year, but headteachers faced a £2.5bn black hole over the next three years.

That huge funding gap arose out of the Government's failure to provide enough money to implement the agreement aimed at cutting teachers' work-load and modernising staffing within schools.

A DfES spokesman said it was contemplating "serious reform" of the funding system if LEAs were not passporting money earmarked for schools.