Nick Clegg today denied that the Government's flagship pupil premium is being used by schools to plug budget cuts, amid claims that it is not extra funding.
The Government has made "absolutely sure" that the premium is additional to basic school budgets, and must be used as such, the Deputy Prime Minister insisted.
Mr Clegg defended the pupil premium - which was a key Lib Dem policy at the last general election - as he announced plans which will see schools compete for cash rewards by closing the gap in achievement between rich and poor youngsters.
The pupil premium is extra funding attached to disadvantaged children, following them as they move schools.
It is given to pupils who are eligible for free school meals (FSM) - a measure of poverty - and will be worth £600 per eligible child in 2012/13.
But headteachers have raised concerns that the funding is simply making up for losses elsewhere in school budgets.
Asked about the issue as he made a speech to the National Education Trust at New North Academy in London this morning, Mr Clegg said: "We - and I made absolutely sure this was the case when we announced the premium to ensure it was properly additional to the basic school grant - protected the basic school grant.
"We maintained it, on a cash basis, even as pupil numbers increase, throughout this parliament.
"Yes, of course there are other pressures. Of course teachers are having to face difficulties like a pay freeze and changes to their pensions. I am not trying to wish those away.
"But the basic architecture of the pupil premium - which is already a significant size and is going to double by the end of the parliament - on top of a basic grant which is held steady in cash terms for all pupils across the country, I think shows that it can and must be used additionally and not to plug gaps."
The Liberal Democrat leader added: "To those people who somewhat churlishly say it's not enough: it's going to be a whole lot bigger, twice as big by the end of this parliament.
"And it is already making a difference."
His comments come just weeks after a survey of 2,000 schools leaders, conducted for the Press Association by the National Association of Head Teachers (NAHT), found that more than four-fifths say the premium has either equalled or not made up for financial losses elsewhere.
Many heads also remain unconvinced that the premium will be beneficial to their poorest pupils, with just over a third saying they do not think it will make a difference to a student's achievement.
NAHT general secretary Russell Hobby said today: "NAHT has always supported the idea of a pupil premium and is perfectly comfortable with being judged on the performance of the most vulnerable pupils - this is, in any case, already happening.
"The Government needs to be frank, however, that the pupil premium is not extra funding - it merely substitutes for cuts elsewhere. It is a redistribution of funds within the system, not additional funding.
"However, other aspects of Government policy are undermining the aspirations of the pupil premium. Contrary to Mr Clegg's aims, the Treasury is actually asking the School Teachers Review Body - which sets teacher pay - to force schools which serve poorer communities to pay their staff less. This will make it harder to attract the best teachers and widen the gap between the rich and poor."
Under plans announced by Mr Clegg in his speech, from next year 50 schools will be handed up to £10,000 for doing the most to boost the results of their poorest pupils.
He said that the premium is "the most important lever" in improving the chances of children from disadvantaged backgrounds.
"We've made the case for the Pupil Premium," Mr Clegg said.
"We've won the battle to get it properly funded.
"Today I want to talk about how we make it a success.
"Because we now have a once-in-a-generation chance: get this right and we make good on education's progressive promise: to give every child the chance to go as far as their abilities and effort can carry them."
He added: "I want to strike a deal between the coalition Government and our schools and teachers: we'll give you the cash; we'll give you the freedom; we'll reward and celebrate your success.
"But in return, we want you to redouble your efforts to close the gap between your poorer pupils and everyone else. We won't be telling you what to do, but we will be watching what you achieve."
The Government has "no desire to micromanage schools," Mr Clegg said, but added there will be research into the best uses of the premium with the evidence "spread through the system".
Mr Clegg said the money is being used for breakfast or homework clubs, one-to-one-tuition, counselling services, educational trips, and extra staff - similar to the findings of NAHT's survey.
The Lib Dem leader also announced plans to invite groups of local schools to bid for extra cash to help poorer youngsters struggling with reading and writing in the first year of secondary school to catch up in these core skills.
Shadow education secretary Stephen Twigg said: "Nick Clegg has got a nerve talking about social mobility.
"His Government has cut education spending by the biggest amount since the 1950s.
"More than half of headteachers say they will be forced to use the pupil premium to plug holes in their budget.
"Free schools set up by this Government take far fewer pupils from deprived background than average.
"And half of the education capital spend in the spending review is being spent on pet projects, rather than real need.
"With a million young people unemployed and families with children paying more than double what the banks are paying to reduce the deficit, the public will not be fooled by Clegg's desperate attempt to pretend this Government is fair."
Brian Lightman, general secretary of the Association of School and College Leaders (ASCL), said: "ASCL supports the pupil premium and secondary schools are making every effort to direct the funding into strategies which will make a real difference.
"Providing additional, targeted support is a real challenge at a time when almost all other funding streams are reducing and schools are forced to cut back on existing projects.
"There are many different interventions which can be effective, including highly successful programmes of one-to-one tuition. However, these are expensive and many schools are struggling to maintain them."
Barnardo's chief executive Anne Marie Carrie said: "Offering schools the carrot of a £10,000 prize is not the best way of incentivising them to better spend the pupil premium and truly help our most vulnerable children and young people.
"If the Government really wants to ensure that the pupil premium is being spent effectively, it should be assessed as part of a school's annual Ofsted inspection.
"For the pupil premium to help boost social mobility, the Government needs to introduce these assessments urgently and ensure that they are rigorous, as the current evidence suggests that many schools are using the pupil premium as a way of plugging holes in their budgets."
Christine Blower, general secretary of the National Union of Teachers (NUT), said: "Introducing competition for funding amongst our schools is quite unacceptable. All schools must be fully resourced to provide the first-class education service we need.
"State-funded education must not become a lottery. If there is additional money, then that should be used where it is most needed, on the basis of proper analysis of schools' funding requirements.
"The Government needs to be honest. The pupil premium is simply being used to plug gaps in schools' budgets because of other funding cuts by the Government. It is not being used for specific projects in the way Nick Clegg apparently thinks."
Martin Johnson, deputy general secretary of the Association of Teachers and Lecturers (ATL), said: "It's great that one coalition partner is serious about reducing inequalities, and schools are grateful for the pupil premium. Unfortunately the premium has to be used to plug the gap left by real-terms cuts in schools' main funding. This funding already distributes about £3 billion a year on the basis of disadvantage.
"Teachers are very keen to find out what works to improve the achievement of the disadvantaged, because all the ones quoted by Nick Clegg have been widely used for many years.
"Nick Clegg asks: 'How can it be that a child's destiny is still determined by their background?' The answer is embarrassingly simple and is well known to Lib Dems - England's extreme gap in education achievement is directly connected to its extreme social inequality, almost the worst in the developed world.
"The coalition Government's austerity policies, with its attack on the jobs, pay and conditions and benefits of the less well-off, are increasing the gap.
"The real answer to the achievement gap lies in new economic, industrial and regional policies, not in education policies based on dodgy stats and cheap gimmicks."