Demand for state school places has escalated with one in five councils saying the recession is forcing parents to forgo privately educating their children.

It comes as parents' complaints about school admissions soared in the last year and a “substantial” number of schools were found to be at “significant fault” in handling applications.

A survey by the Local Government Association (LGA) found that twenty per cent of councils have experienced an increase in the number of requests for state school places in the last six months and a further 13 per cent think the problem will worsen as the economic gloom deepens.

In one area of London, where the problem is most severe, a makeshift school has been created in a church hall to cope with the added numbers.

All Hallows Church hall, in Camden North London, is rapidly being converted to accommodate at children without a place at an established school.

The LGA blamed a fall in the number of parents who can afford private education and a stagnant property market preventing parents from leaving large urban areas before their children start school.

Richmond-Upon-Thames has seen an eight per cent drop in numbers going to independent schools which it blames for a high demand for state primary school places in the London borough.

Complaints about school admissions have increased by half in the last 12 months, the Local Government Ombudsman said.

There have been more than 1,400 complaints since the toughened up admissions and appeals code came in last year, the vast majority from parents who failed to gain a place at their preferred school.

In some cases the new statutory codes had been breached, the report said, and investigators found “significant fault” with the way many schools handled admissions applications or appeals.

In total 1,422 complaints were registered with the Ombudsman in 2008/09, up from 942 in 2007/08.

A multi-million pound package to provide temporary classrooms and extra staff was announced today but councils say it will not be enough to tackle the acute shortage of primary places for children starting school in September.

Vernon Coaker, the Schools Minister, announced £200m in funding to plug shortages in school places certain areas of England but it will not be available until 2010.

London Councils, which represents the 33 local authorities in the capital, estimates it needs up to four times that amount over the next five years in order to meet demand.

It says that £260 million is needed in London alone in the current spending review period, which ends in 2011.

The Department for Schools has said it is aware that some authorities are dealing with “unanticipated rises in demand” for reception places.

A spokesman for London Councils said: “This problem clearly won’t be fixed here. We also need to explore some long-term changes to the way local authorities are funded to prevent a situation like this occurring again.”

A report published earlier this year by London Councils revealed a shortfall of 2,250 places in the capital this financial year.

That will rise to 18,300 by 2014, the report said.

Official figures show that there has been a 3.3 per cent rise in reception-aged pupils nationally.

Les Lawrence, chairman of the LGA children and young people’s board, said: “In the short-term councils will be working with schools to help them find extra capacity and draft in extra teachers and support staff, but there also needs to be an emphasis on improving methods of forecasting for the future.”

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