The UK Contractors Group is writing to Michael Gove warning that a decision is needed urgently on the BSF projects still being reviewed because they had reached an advanced stage.

Stephen Ratcliffe, director of UKCG, said: “We need some fast decisions about these projects because bid teams need to be kept together which costs more with each passing day.”

Contractors have also highlighted fears that the new review of school spending will drag on into next year.

Ratcliffe added: “We could be well into next year before we hear anything about the procurement method the Government favours.

“By the time a new programme is in place and everything is readvertised supply chains will have been broken up.”

The letter to Gove does not raise the issue of compensation for bid costs.

But contractors are considering a class action and are seeking legal advice from Pinsent Masons while they wait to hear the fate of the remaining school projects.

In some cases where preferred bidders were named bid costs run to more than £10m. As a result total UK contractor bid costs are expected easily to exceed £100m.

New figures reveal that councils have spent at least £160m doing the legally required preparation and paperwork for school rebuilding projects.

A snapshot survey carried out by the Local Government Association, which represents councils in England, has found more than £161m has been spent by 67 authorities getting ready for rebuilding programmes which have now been cancelled.

The LGA is calling for preparatory work and plans drawn up under the BSF scheme to be eligible for consideration under any new programme to share out capital funding.

Councillor Shireen Ritchie, Chair of the Children and Young People’s Board at the LGA, said: “Councils have invested millions of pounds of taxpayers’ money preparing for school building schemes which they are told will now not go ahead. Town halls which have embraced this Government initiative should not be out of pocket and their residents should not end up footing the bill.”