Contradictions in government policy and weak local authorities are to blame, says the report from the Audit Commission, which offers a powerful critique of the Government's efforts to introduce market forces into schools.
One in five parents now fails to get their first choice of school - twice as many as previous official estimates - and in inner London the figure is almost half.
While popular schools are bursting at the seams with oversized classes, unpopular ones have 900,000 empty places.
One school in six is less than 75 per cent full while one in three breaks the Government's restrictions on the number of pupils it admits.
The Conservative educational reforms have tried to raise standards by encouraging schools to compete for pupils and funds. In the schools marketplace, ministers believed, the strong would flourish while the weak would get better or go to the wall. But the Commission says the reality is different. Government attempts to promote competition between schools have failed either to improve struggling schools or to force them to close.
Although the Government has said that it wants popular schools to expand, it has not provided the money for them to do so.
Meanwhile, the contradictions in Conservative policy are encouraging the waste of millions of pounds each year. At least 40 per cent of surplus places could be removed without endangering parental choice at a saving of pounds 100m, the report says.
Yet the Government's determination to persuade schools to opt out of local authority control makes councils unwilling to close schools. Ministers have allowed more than 40 schools under threat of closure to become grant maintained.
While they want oversubscribed schools to expand, the Department for Education will not usually provide money for this while empty places exist in neighbouring schools.
Some reforms have led to important changes but market reforms have left local authorities with too little power to intervene in admissions and planning: "Unwanted and unnecessary school places lock up scarce resources which could be used elsewhere. Class sizes continue to rise in popular schools. Appeals are on the increase. Schemes for school rationalisation are decreasing. Government and local authorities blame each other. The system risks gridlock."
The Commission asked MORI to conduct a poll into the number of parents who get their first choice of school. About 10 per cent failed to secure a place at their first choice school and a further 9 per cent did not express a genuine preference, because they believed they had no chance of getting a place at the school that they really wanted.
In some places, parents face a bewildering array of admissions arrangements, mainly because of new types of school created by the Government.
In Sutton Coldfield, Birmingham, parents may express a preference for up to seven different types of school and have to deal with six different admissions authorities. They can hold on to a sheaf of offers and not make their final choice until the start of term.
Plans for successful schools to run less successful ones, which were suggested on Monday by Tony Blair, the Labour Party leader, have also been outlined in the report.
Robin Squire, the education minister, accused the Commission of devaluing its research by reaching simplistic conclusions. There was no gridlock, he said.
"As the Commission acknowledges, Government policies have driven up standards. I am sure that it is not suggesting a return to the dreary, monolithic system of education bereft of choice," Mr Squire added.
But David Blunkett, Labour's education spokesman, said: "Today's report is a devastating indictment of how the Tories have failed on key aspects of their education policy. The report warns of the need for sensible local planning and backs Labour's proposal for regular education plans."Reuse content