She appears to dismiss the idea of a voucher scheme endorsed by Jonathan Aitken, Chief Secretary to the Treasury, who is responsible for public spending.
In today's Times Educational Supplement, she says vouchers "are not the favoured option" to deliver the Prime Minister's promise of nursery education for all four-year-olds whose parents want it. She says: "Legislation may not be necessary for our nursery proposals. A full-blown voucher scheme would require legislation."
Vouchers, long advocated by the free-market right, would give parents cash amounts which could only be spent on approved pre-school education - but which could be spent in the private sector. Such a system "has powerful attractions, principally because it puts choice directly in the hands of parents", Mr Aitken said at a Conservative think-tank seminar on 15 March.
But Mrs Shephard, already furious about the "tight" spending limits agreed for education this year, was notably unenthusiastic, reflecting a long- growing Cabinet split. Her opposition to a voucher scheme is now becoming clearer in public. Backing a voucher scheme would run counter to her political strategy of calming troubled ideological waters after years of upheaval in education.
Education policy is the focus of a fierce ideological struggle in the Conservative Party in the run-up to the next general election. It is understood that Mrs Shephard has succeeded in keeping right-wingers off her group discussing proposals for the manifesto.
But Mr Major is believed to be keen on vouchers and some observers say that Mrs Shephard is only fighting a rearguard action.
David Blunkett, Labour's education spokesman, tried to exploit Cabinet divisions, saying last night: "Gillian Shephard has clearly rejected a key part of the John Major's supposed fightback."