Members of the Association of Teachers and Lecturers, seen as Britain's most moderate teaching union, have warned the government that it faces industrial action over the reform of classroom conditions.

The union warned of strikes if ministers proceed with £1 billion changes without dealing with claims that they were not being properly funded and would lead to the "dumbing down" of the profession.

David Miliband, the schools minister, told the conference that an extra £500 million, which could help ease budget fears, was still unallocated by local education authorities.

But he was met with some barracking when he said the funding problem was a wide "divergence" of cash given to neighbouring schools.

Gerald Imison, ATL's joint acting general secretary, said: "The minister has been left in no doubt that funding issues are at the heart of our members' concerns."