The numerous Sure Start funding streams are being merged into one for child care to give councils more flexibility education secretary Charles Clarke announced.

He said developing education for under-fives should be a priority.

He also announced that four small grants covering fostering, adoption support, teenage pregnancy and unaccompanied asylum seeking children services would be amalgamated into a single children's services grant from 2006.

He said this would give councils "the maximum discretion to target services at local need within clear national expectations".

Clarke added that councils would increasingly commission and work with other agencies rather than provide services directly.