Michael Gove, the education secretary, announced that from September 2011 schools will be given a cash incentive for every underprivileged child they teach, as part of a shake-up of schools funding.
The payments, which will come from outside the budget for schools, are intended to stop the middle classes dominating the best schools and correct the "significant underachievement" of disadvantaged pupils compared with their peers.
But teaching leaders attacked the government for putting no controls on how schools spend the money, saying the extra cash is unlikely to reach the pupils who need it most.
Exact details of the funding, including how to determine which children attract the premium and how much schools should receive per pupil, will be determined following 12 weeks of consultation.
Eligibility for free school meals, which are means-tested, has been touted as a potential measure of poverty on which to base the system, along with whether a child's parents receive out-of-work tax credits.
Prior to the election, the Lib Dems suggested that assigning the premium to children on Free School Meals would initially cost £2.5 billion a year.
Official figures show that just over one in four teenagers eligible for free school meals achieve five GCSEs at grades A*-C including English and maths, compared to more than half who are not eligible.
Chris Keates, general secretary of the NASUWT teaching union, said: “The proposed new pupil premium is unlikely to result in additional money going to the most disadvantaged pupils in the system.
“The pupil premium might follow the child but once it gets into the school it will disappear into the school’s budget and simply swell the excess of £2billion that is sitting unspent in school bank accounts.
Parents should be deeply concerned by the Coalition Government’s refusal to date to introduce any safeguards that would ensure that any additional funding arising from a pupil premium benefits the pupils for whom it was intended."
Dr Mary Bousted, general secretary of the Association of Teachers and Lecturers, said: “If the pupil premium really provides extra and new money for schools with deprived pupils it should be widely supported. But the devil is in the detail, especially the big question of how much extra funding will follow each pupil."
Mr Gove said children from poorer backgrounds "are falling further and further behind in the qualifications race every year".
He added: "They are effectively condemned to ever poorer employment prospects, narrower social and cultural horizons, less by way of resources to invest in their own children – and thus a cycle of disadvantage and inequality is made worse with every year that passes."
--By Nick Collins,27 Jul 2010