Some state schools have been "charging" parents hundreds of pounds before allocating places for their children.
Most of the schools involved were faith schools, many of which can legally ask parents for voluntary financial contributions towards their children's education. But a snapshot survey in three out of 150 local authorities found some schools were "asking parents to commit to making financial contributions as a condition of admission".
In one case, parents were told to complete a standing order at the time they applied for a place.
Ed Balls, the Children's Secretary, said charging parents was "totally unacceptable" and ordered the payments to be stopped. They came to light after a survey of the schools admission system found a "shocking" number of schools breaking the rules. Officials refused to name the schools but said they would be identified when the allegations have been verified.
"We have found the evidence in the public domain. It's on websites and places like that," said one official.
The check of schools in three authorities, Manchester, Northamptonshire and Barnet in north London, found that some popular schools were using a number of improper methods to weed out children for admission.
They included not giving children in care the priority required by law, asking about the marital status, occupational or financial status of the parents and interviewing children.
Mr Balls ordered an immediate ban on all attempts to raise money in return for the allocation of a place for a child.
The schools are also being warned that they could be breaking the rules for the provision of free state education by asking parents to pay money before they are allocated places for their children. Schools have been putting pressure on parents to make "voluntary contributions" for improving school facilities, leading them to believe they had no option but to pay up, or lose their child's place at the school.
Mr Balls said he believed the breaches of the admissions codes were widespread. "We didn't single them out. I have no reason to believe that what is happening in these three authorities is any different from what is happening in the rest of the country."
The Independent has learned some parents are so desperate to get their children into schools they have volunteered free trips abroad to headteachers.
Mr Balls is now amending the Education and Skills Bill to place a further duty on local authorities to report each year on the legality, fairness and effectiveness of school admission arrangements in their area.
Parents are to be issued with a guide on admissions appeals and the time limit for an appeal to the adjudicator is being extended from six to 16 weeks.