Whitehall could take full control of state school funding in England under proposals reportedly drawn up by ministers to remove the role of town halls.
A switch to a "national funding formula" is Education Secretary Michael Gove's preferred option for reform, according to a draft copy of a forthcoming White Paper seen by the Financial Times.
Centrally resetting the budgets for primary and secondary schools would end the present "opaque and illogical system" of allowing local authorities flexibility to decide budgets, the paper is reported to say.
Headteachers would also be given extra freedom over spending their allocation..
A consultation on the changes is expected to start early next year, before the introduction of a new system from 2012, and ministers will be braced for a backlash from councils - especially those who would lose funding. The question of whether there should be "any local discretion" is among questions it will pose.
A spokeswoman for the Department of Education said: "We believe the way education is funded at the moment leads to huge variations in the money similar schools receive so we want to introduce a fairer and more transparent system. Details will be set out in our White Paper later this year."
The leader of the country's biggest teachers' union attacked the plans as part of a "mission of massive centralisation" that would leave schools "cast adrift".
NASUWT general secretary Chris Keates said: "The coalition Government has an irrational contempt for local authorities which is equalled only by its contempt for public services.
"Once the funding link with local authorities is cut, every school will be cast adrift, at the mercy of a Government quango.
"This national, unelected quango will distribute money without the slightest interest in the needs of individual schools or their local communities."