Up to 25 nursery schools in Birmingham are under threat from Government plans to cut funding in parts of the city, the council has warned.
Proposals to direct cash towards the most deprived areas will threaten services in existing schools, according to a senior official.
Lesley Adams, Birmingham City Council’s head of early years and childcare, issued the warning as she gave evidence to a House of Commons inquiry at Westminster.
Cash will be awarded on the basis of the number of children attending a school - which means nurseries currently offering full-time places of five hours a day will be forced to provide part-time places instead, so they can admit more children and receive more money.
And it will be diverted to the most deprived areas, which may benefit some schools but will mean funding cuts for the rest.
Ministers have already been forced to delay the launch of the new system from April 2010 to April 2011, after councils said they were not ready for it.
Speaking to the Commons inquiry, Ms Adams said: “Our particular issue in Birmingham is that we have 25 maintained nursery schools, which we are very proud of, many of which provide full-time places.
“On the basis of funding participation rather than places, we need to do a whole lot more work to find a way of preserving those schools and as things stand at the moment, that is going to be very difficult for us to do.”
She added: “We are going to have to have a set of criteria for funding participation beyond part-time, based on deprivation factors.
“Which is fine, but some of our nursery schools aren’t necessarily in areas where there is the greatest level of deprivation that there is in the city.”
Cash would be diverted away from the council’s nursery schools to privately-run nurseries in deprived areas, she said.
“The impact of moving this money around means that the maintained nursery sector is threatened.”
Ms Adams warned: “Those schools which don’t take in children that attract extra money, because they are not deprived enough, that’s where the problem’s going to be.
“They will have to stop taking full-time children and take part time children.”
The council’s nursery schools played a vital role in the city’s education system, she said.
“We would like to hang on to our 25 nursery schools because they are like engineers, developing quality provision that others can learn on. We’d really like to hang on to them.”
Children’s Minister Dawn Primarolo announced last week that the new funding system, called the Early Years Single Funding Formula, would be delayed.
But she said: “The government remains strongly committed to the introduction of the Early Years Single Funding Formula in all areas from April 2011.
“We believe that it is only through the effective implementation of the Early Years Single Funding Formula that all providers across the sector can have confidence in local decisions about funding.
“This twelve month delay should provide sufficient time for concerns to be addressed, without incurring a risk of drift. It will also allow time for more dedicated support to be offered to those local authorities that need it in order to complete the development of their formula.”
