Spending watchdogs have cast doubt on whether current levels of local authority funding are sufficient to cope with the largest baby boom since the 1950s.

A National Audit Office (NAO) study into capital funding of new school places finds extra provision will be needed for 256,000 young children by 2014/15 to meet increased demand.

The overwhelming majority of the new places, some 240,000 are in primary schools, of which 37% are needed in London, the watchdog revealed.

Despite a net increase of nearly 81,500 new places in the last two years – funded by a specific £3.2bn spending review allocation for new school places and a further £982m capital expenditure boost last year - Amyas Morse, head of the NAO noted ‘there are indications of strain on school places'.

Although all local authorities are at present meeting their statutory duty to provide enough places, the auditors found many signs of pressure faced by the schools system.

More than one-in-five schools were full or over capacity in May 2012 and the number of infant classes containing more than 31 children has doubled since 2007, the study finds.

Adding to the funding confusion, however, local authorities informed the NAO their  contributions towards the cost of new places were higher than the Department for Education's own financial assumptions.  

While noting the DfE had improved the quality of information and data collection used to make funding decisions, the NAO said it doesn't know how local authorities are using existing funds.

Margaret Hodge, chair of the Commons Public Accounts Committee criticised the department's ‘pedestrian' attitude to data-collection and derided as ‘staggering' the use of four different methods to calculate funding in the last five years.

‘I find it hard to see how uncertainty over future funding levels can do anything but hinder local authorities' ability to plan, putting strain on already stretched resources,' said Ms Hodge.