Stunned local authorities received phone calls last Friday confirming that around 600 schemes spared the axe during the BSF cull will have to cut their budgets by 40%.

Some local officials now fear  they will have to abandon new school construction completely and concentrate on refurbishing existing buildings.

Leicester city council estimates it will have to cut its building programme by £65m while Salford council said the move would lead to cuts worth £40m.

One council chief said: “No-one was really expecting this and we are suddenly faced with finding these huge savings almost overnight.”

One education contractor told the Enquirer: “I can’t see how it’s possible to build a school with just 60% of the budget.

“It’s all very well coming up with these numbers but the result will surely be even fewer schools.”

Around 600 projects are affected and savings of £6bn have been targeted. That 600 also includes some academies.

Each authority’s reduction is expected to be confirmed by next month, with meetings between councils and Partnerships for Schools this week.

The department for Education said: “The secretary of state has been clear that school rebuilding will continue, but that capital expenditure on schools must be more cost effective given the current financial climate.

“He has discussed this already with senior figures in the construction industry about how this best can be achieved.”

Shadow education secretary Andy Burnham said: “Education secretary Michael Gove gave the green light for these projects and now he is pulling the rug from under them.

“It is one thing to ask for efficiencies – quite another to demand them on a scale of 40%.”