Mr Blunkett announced that the nursery voucher scheme would end this September but that the Government would continue to subsidise some private nursery places.
All existing places for four-year-olds will receive funding whether they are state, voluntary or private. The voucher scheme, introduced nationally last month, gives all parents of four-year-olds a voucher worth pounds 1,100 a year to be spent in the nursery of their choice.
From next April local authorities will be responsible for new public/private partnerships which will provide places for under-fives. No authority will receive government money unless it includes private nurseries and playgroups in its plans. All will have to set targets to include three- year-olds.
Until next April, there will be interim arrangements. Parents with four- year-olds in areas where the authority can produce a plan by this September will be entitled to a free place in any of the nurseries in the plan. Those in areas where there is no authority plan will be eligible for certificates from central government for two terms, worth the same amount that they would have received under the voucher scheme.
If they want to use the certificate at an expensive private nursery they will have to pay the extra themselves.
Mr Blunkett said: "We are committed to providing high quality nursery places for all four-year-olds where parents want one. We will achieve this goal by sensible joint planning at local level not the bureaucratic nightmare of a wasteful and divisive nursery voucher scheme. There will be no more destructive competition".