Plans for improving borough schools have been altered as the council seeks to make good a funding gap of more than £1.6million announced last week.

Richmond upon Thames Council apologised to headteachers after an administration blunder led school leaders to think there would be around £2.5million of Government cash coming their way when in fact it was less than £800,000.

Primary schools were left with budget shortfalls for personalised learning of between £6,700 and £47,000 while secondary schools were faced with the headache of a £62,000 to £151,000 hole in projected spending.

The council's executive agreed on Monday to use the £1million fund set aside to improve school performance, and to underwrite a further £746,000 to cover all expected additional costs.

Richmond council's cabinet agreed to spend £232,000 raised after a reduction in school insurance charges and the remainder will come out of school reserves, which the borough's education supremo said the council has been told to collect by the Government.

Councillor Malcolm Eady, Richmond council's cabinet member for education and children's services, said the Government instructed councils to reclaim five per cent from all school budgets, projected to be in the region of £300,000, and to take back all money that isn't spent at the end of the financial year and re-distribute it.

He said if the school forum, the group of borough headteachers, agreed to spend this money to cover the funding gap the hole would be closed while the council would underwrite any additional costs.

"I am very happy my colleagues have voted to support our schools by making this additional money available," he said. "Last week it became obvious that council officers had made a serious mistake and we held our hands up and said sorry.

"We also said that we would set matters straight and now we have.

"We are going to have to use the £1m for the school development fund. This was a fund we had set aside for school improvements.

"The money we had given to the schools is for personalised learning, so we will achieve this result in improving the schools, but by a different method.

"It puts me in the very happy position to reiterate that there will be no adverse impact as a result of the initial error such as redundancies as some had feared despite our initial reassurances.

"In fact there will now only be more resources for learning in our schools."

Coun Nick True, leader of Richmond Conservatives, said the council had to make good its mistake and described the situation as monumental incompetence.

"One day they set up a £1 million Schools Improvement Fund. The next day they have to pour the whole lot into a black hole Coun Eady has dug," he said "To add insult to injury a big slice of the money being spent to save Coun Eady's job is coming from schools' own savings. This is a one-off panic response and offers no guarantee of money next year, when schools could again face cuts.

"And where would schools be if the Lib Dems hadn't inherited reserves they claimed we didn't need?

"Teachers, parents and pupils can thank the previous Tory Council there was money for this costly bale-out, not the serial Lib Dem bunglers now running our schools."

Coun Eady said the money for personalised learning was due to end at the end of the 2007/08 school year but he hoped to persuade cabinet colleagues to invest further resources if it was successful.