The prime minister has pledged to help head teachers by setting school budgets for three years.

Speaking at the National Association of Head Teachers' conference in Cardiff on Sunday, Tony Blair insisted that education would remain his government's top priority.

And he hinted at a range of new policies that could be implemented during a third labour term in government.

Following last year's rows over school budgets, moves to a three-year funding agreement will be announced in July, Blair said.

"You...need the financial stability and autonomy to plan budgets effectively, and all the reform that money can drive," the prime minister told the conference.

"One of the greatest difficulties for schools, as the last two years has shown, is to plan ahead not knowing year on year what the school budget will be."

The problem would be tackled by a move to three yearly budgets for schools, with guaranteed funding to underpin them, and aligned to the school year rather than the financial year.

Blair also indicated that the offer of a free nursery school place for every two-year-old is likely to be a key manifesto pledge.

The government aims to create a "nationwide universal early years service for under fives", said the prime minister.

"Pre-school education has a powerful impact on children's development," he added.

"Even at 22 months there is a significant divergence in development between children of different social backgrounds, and it steadily increases thereafter.

"Children achieve more if they get the best of early starts."

Education ministers also aim to develop the concept of extended schools, said Blair.

"By this we mean the school able to provide a broad programme of after-school activities, including sport, study support and clubs, with extra support for special needs and the gifted and talented alike.

"And where the school has new facilities, with those facilities available to the wider community as appropriate.  Many schools are already extended schools in this sense: we want to extend best practice rapidly."

Speaking to the same conference, shadow education secretary Tim Yeo pledged to reduce the red tape burdens on head teachers.

He said there had been a "meddlesome stream of targets, diktats and directives from the central planners at Whitehall" since 1997.

"Seven years after Tony Blair claimed his first three priorities would be 'education, education, education', the record is telling a different story," Yeo added.