Higher spending on security in the province following the ending of the IRA ceasefire early this year has forced education budget cuts, according to Sir Patrick Mayhew, the Secretary of State for Northern Ireland.
Withdrawing the vouchers, due to be introduced next September, will save pounds 8.3m a year.
Announcing a pounds 60m cut in education spending, Sir Patrick said: "The peace dividend has, alas, been reversed and this obviously has an adverse effect on the provision of public services in Northern Ireland." An extra pounds 120m was being channelled into law and order and compensation for criminal damage during 1997-98, he said.
The decision puts Northern Ireland out of step with the mainland, where nursery vouchers are due to be launched in April. Labour seized on the reversal as evidence of a breakdown of the controversial pre-school vouchers scheme. Labour's education spokesman, David Blunkett, said: "The bureaucracy of vouchers is such that even some ministers now realise it makes more sense to provide real nursery places."
The latest blow to the nursery voucher scheme comes just weeks after a Budget announcement of a pounds 56m cut in the money promised on the grounds that pilot schemes showed it was unlikely there would be 100 per cent take-up.Reuse content