Hundreds of independent schools could lose their charitable status unless they increase fees for middle-class parents to fund more bursaries, a landmark ruling indicates today.

Two of the first five schools to be investigated by the Charity Commission have failed the tough new requirement of providing “public benefit”.

The long-awaited decision has ramifications for fee-charging schools with charitable status, which make up the majority of the independent sector. The tax breaks that they receive are worth a collective £100 million.

The independent sector reacted with anger and said it could take legal action against the commission. It said that parents, already struggling in the recession, were likely to end up paying higher school fees to subsidise poorer families. The commission had focused on the financial benefits, it said, while placing little weight on whether less wealthy schools shared their facilities with the community or had forged links with state schools.

The two schools that did not pass the charitable test are relatively small prep schools. Both failed because they did not offer enough bursaries, even though they were praised for running initiatives which helped local children and organisations.

One, Highfield Priory School in Fulwood, Lancashire, does not provide bursaries because it keeps fees as low as possible, and does not accrue a surplus.

The other, Saint Anselm’s School in Bakewell, Derbyshire, does offer bursaries worth up to 100 per cent of fees to poorer families, but the number was not deemed sufficient by the commission.

Simon Northcott, the head teacher, said: “As a stand-alone prep school, we just don’t have the pot that other schools have. We failed only because we’re not producing enough bursaries. But nowhere in the course of this process has the commission given us a clear idea of what we need to achieve.

“It’s like being told you’ve failed a maths exam but without being told what the passmark is.”

A spokesman for Highfield Priory said: “The governors of Highfield Priory are disappointed at the Charity Commission’s conclusion on public benefit. However, the continued success and sustainability of the school is not in doubt. Highfield Priory has served the local community well for nearly 70 years and our aim remains to continue to provide a high-quality education for public benefit, affording pupils many opportunities to succeed academically, creatively, artistically, musically and in a wide range of sports both at local and regional level.

“The governors will now consider fully the implications of the Charity Commission report and respond to it after taking professional advice.”

The 2006 Charities Act puts a new onus on charities to prove their public benefit, and the commission has assessed a dozen organisations, including the five schools.

Independent schools have been waiting with trepidation for clarification on what constitutes “public benefit”, and were assured that schools would be judged individually.

David Lyscom, head of the Independent Schools Council, said that he was deeply disappointed by the commission’s findings and its focus on the amount of means-tested bursaries provided by each school.

He said: “The implication of the commission’s findings appears to be that many schools must now aim to provide a significant — but still unspecified — proportion of their turnover in full bursaries.

“This will inevitably lead to fee increases for the vast majority of parents, putting the benefits of an independent education beyond the reach of a greater number of children.

“We will be expressing our concerns very loudly and will have to look very carefully at the legal basis of the Charity Commission judgments, and consider whether we need to take further action.”

When asked if this could include legal action, Mr Lyscom said: “It is one of a range of options we could take.”

He added that, in focusing on bursaries, the commission had played down the significance of partnerships with state schools and ignored the £3 billion a year that the independent sector saved the public purse in educating children.

Schools which were concerned that they would be judged purely on the money spent on bursaries have been assured that this will not be the case. Dame Suzi Leather, chairwoman of the commission, had previously acknowledged that bursaries may not be an option for some smaller schools.

However, the findings are likely to send shivers through low-cost schools that operate near the margins and may be struggling. The recession has already taken its toll on the independent sector, with several small independent schools closing or merging in the past year. The governors of Highfield and Saitn Anselm’s have three months to confirm their intention to address the issues raised by the commission, and a further nine months to provide a plan of how this will happen.

A spokesman for the commission said: “It is not correct to state that the Charity Commission’s initial public benefit assessments of charitable independent schools focused only on the provision of means-tested bursaries.

“We have been very clear throughout this process that, although fee reductions are an obvious way of making the services of a fee-charging charity more widely accessible, that is not the only means of achieving this.”

Times recommends

• Students abandon the drink for gyms and juice
• Ofsted: third of Baby P-style reviews inadequate
• Top boys' school picks first woman head