School governors are warning that teacher recruitment problems could worsen and class sizes increase if Oxfordshire's education budget is cut under new funding proposals.

The Government is due to announce a new formula on how it will divide funding between local authorities.

The changes will affect funding from April and it is predicted that Oxfordshire could lose up to £40m from its grant, with a knock-on effect on services.

The Oxfordshire Governors' Association estimates that Oxfordshire's schools could lose between £1.9m and £13.1m.

The organisation has encouraged its members to lobby the government to protect schools from funding cuts.

OGA chairman Carol Thomson said: "We can't afford to take a cut in our budget and maintain standards. It's as simple as that.

"We are constantly being pushed to raise standards but we need to pay more than other areas to get quality teachers, assistants, and cleaning staff because of the cost of housing.

"Potentially we will have to increase class sizes, because a cut of £13m would have a direct impact on the staffing levels of our schools."

About 88 per cent of the funding for Oxfordshire Local Education Authority goes on schools, the bulk of which is spent on teachers' pay.

Education officers at Oxfordshire County Council said it had been difficult to plan their budgets for next year because of the uncertainty over funding.

A spokesman for the LEA said: "Planning for the next financial year is particularly difficult given the degree if uncertainty which surrounds the local government settlement for 2003/04.

"The education service, in parallel with other council departments, has started to map out the demands which will be made of it in 2003/04, and what needs to be done to address those demands.

"The Education Service bids will be considered in parallel with those of other council services by county councillors and, ultimately, by the council itself on February 4.

"Given the uncertainty about next year's budget, schools have been advised to be prudent and plan for a standstill budget."