Schools are warning they may have to axe staff and cut spending.

Teachers' leaders in West Sussex have written to all schools, expressing concern over school budgets after the county received the lowest increase in the funding of pupils nationally.

The rise in funding per pupil is 3.2 per cent, compared with an average increase of 5.2 per cent and a maximum of seven per cent.

Several important grants to schools have also been withdrawn by central government.

Sally Greenwell, West Sussex Cabinet member for education and the arts, said the county council was acting to protect the core budgets for schools but was unable to replace all the funds.

She said: "The outcome of this is that many schools may have to reduce their costs and this may mean making staffing or other reductions.

"There is also uncertainty for the financial year 2004/5 about how much funding the county council will receive but we know again that it will be very poor.

"We will be lobbying the Department for Education and Skills directly, approaching MPs to seek their support and tackling the issue through the voice of associations, unions and other groups which represent the interests of our pupils in West Sussex."

Headteachers are being told to brief staff, governors and parents on the likely financial position for their school.

Among the teachers' leaders who signed the letter to schools were Peter Senior of the secondary heads' executive, Chris Hall, primary heads' executive and Robert Back, director for education and the arts.