A fierce political row over funding for schools with alleged links to Islamist extremists raged on today, with Children's Secretary Ed Balls accusing David Cameron of making false statements in the House of Commons.
The Conservative leader yesterday challenged Prime Minister Gordon Brown over the schools run by the Islamic Shakhsiyah Foundation, which he said received £113,000 from the Government - some of it from a fund designed to prevent violent extremism - even though it was linked to the militant group Hizb ut Tahrir.
But Mr Balls accused Mr Cameron of "divisive smears", saying that the cash going to the schools in Slough and the north London borough of Haringey was in fact intended to fund free nursery places for three and four year olds.
Ofsted looked into both schools after allegations were initially made and established that the claims against them were "unfounded", he said.
Speaking at Prime Minister's Questions in the Commons yesterday, Mr Cameron described ISF as a "front organisation" for Hizb ut Tahrir, which Tony Blair promised to ban in the wake of the July 7 bombings in London in 2005.
The Tory leader urged Mr Brown to "get a grip on this issue" and proscribe Hizb ut Tahrir.
"This is a school set up by extremists, passed by Ofsted and approved by the Charity Commission, but in receipt of public money," said Mr Cameron.
"We've got a government that says it wants to prevent extremism, yet its money is funding extremists."
In a letter last night, Mr Brown assured the Tory leader that the Government took "very seriously" the need to counter violent terrorism.
But the PM said that an investigation had already taken place in Haringey and found "no evidence to suggest inappropriate content or influence in the school".
In order to proscribe an organisation, ministers must have evidence that it is "concerned in terrorism", said Mr Brown. A ban on Hizb ut-Tahrir had been considered on several occasions, but each time the advice from police and intelligence services was that it did not meet this test.
Mr Brown added: "I can confirm that no funding related to Preventing Violent Extremism has been given to the schools.
"Individual local authorities are responsible for allocating funding for free entitlement to nursery provision.
"Haringey local authority suspended funding to the nursery school pending an investigation following the media reports on which your comments were based. The investigation found no evidence to suggest inappropriate content or influence in the school.
"Obviously, I would be very concerned if there were any evidence that public funding was going to an organisation that was involved in or associated with extremism, and would ensure that any evidence you may have which has not previously come to light was thoroughly investigated."
Mr Balls told BBC2's Newsnight: "The issue here is that a very divisive allegation was made about two schools which splits communities, which divides our country, on the basis of false allegations.
"The question is were these schools promoting terrorism or extremism? We have sent in Ofsted advisers, who have gone in and said No. I looked across the curriculum and the evidence was No. In the last few weeks... Haringey and Slough looked at the facts and there was no evidence that extremism has been promoted.
"That's the responsible thing to do. The responsible thing for David Cameron to do was to check the facts with me before he made smears and allegations which divide our communities."
But Conservative communities spokesman Paul Goodman told Newsnight: "A charity controlled by an extremist organisation that supports attacks on our troops in Afghanistan has been funded by Ed Balls' department. Ed Balls is throwing up chaff.
"We know perfectly well that the person who headed up this charity has spoken on Hizb ut Tahrir platforms and her husband is the main media operator for Hizb ut Tahrir in the UK."
The headteacher of the school based in Slough last night said ISF was being "used" by politicians.
In a statement, Farah Ahmed said: "Our school is being used as part of a wider political agenda and this type of vilification of the Muslim community needs to stop."
She added: "We would expect politicians to check the accuracy of the information they receive before using it. No-one from the Conservative Party has contacted the school to verify information."