Ministers were wrong to blame councils for failing to pass funds on to schools last year, an Audit Commission report has claimed.

The spending watchdog found that the 2003 school funding "crisis" was more a case of perception than reality.

In its report released on Wednesday the commission concluded that local authorities were not to blame but that there is too little information on, and control over, how headteachers use public money.

With the annual education budget in England topping £24 billion it called for a greater role for councils in scrutinising spending.

The crisis last year was caused by heads fearing they had budget shortfalls and that they would be forced to lay off staff.

The government initially claimed it was not to blame and instead accused local education authorities of failing to pass on to schools all the cash they were getting from Whitehall.

Ministers did later move to secure budgets by promising a four per cent minimum increase in funding per pupil across the primary and secondary system.

However the commission claimed that this response was unnecessary and could prevent the schools most in need of money from receiving it.

"Schools in most financial difficulty are not necessarily in the one third of councils that are to benefit from transitional funding support," the report said.

"Such 'one-size-fits-all' measures are inconsistent with the government's published principles of fair funding... This approach also constrains councils from tackling funding inequalities within their areas."

It blamed a lack of clear information on what happens to education cash for the problems.

"It is startling that education, one of the biggest areas of public spending, attracts the least amount of scrutiny," commission chairman James Strachan said.

"There needs to be much clearer accountability for this expenditure."