By LAURA CLARK

Last updated at 22:00 27 March 2007

Top state schools could face a barrage of compensation claims for cherry-picking the brightest pupils.

Parents will challenge the widespread use of "backdoor" selection techniques that are favouring middle-class high-fliers.

The prospect follows a damning official ruling against one of the most prestigious comprehensives in the country - Lady Margaret School in South-West London.

It was found to be flouting national admissions rules by using "unfair and subjective" criteria as well as misusing entrance tests meant to ensure it had a mixed-ability intake.

Local government ombudsman Tony Redmond highlighted "very serious faults".

He ordered the former grammar school in Parsons Green to pay £500 compensation each to two sets of parents who complained their children had been unfairly turned down in September 2005.

The school was also told to offer the children places. The decision raises the prospect of similar challenges to over-subscribed schools around the country.

Lady Margaret, an all-girls Church of England school which receives 600 applications a year for 90 places - is regularly among the top five comprehensives for GCSE and Alevel results.

Mr Redmond's report says it used extensive background details on applicants - ranging from their attendance record at primary school to their family holidays and hobbies - when deciding places.

It also insisted on meetings with prospective parents - another breach of the rules.

Applicants were required to write personal statements, including paragraphs on family, pets, hobbies and holidays. Mr Redmond said this was "very likely to have favoured the more articulate family and the more able child".

University research has suggested as many as one in four secondary schools operate "selection by stealth", often using tactics that breach the Government admissions code.

Methods include giving priority to children of school staff or former pupils and to those who state the school as first choice.

Ministers have introduced a tougher admissions regime from September 2008 which threatens to catch out many more schools unless they carry out urgent reforms.

Lady Margaret - where pundit Janet Street Porter was a pupil - said it was conducting a full-scale review of admissions and considering introducing a lottery to replace many of its current criteria.

Chairman of governors Richard Waterhouse said Mr Redmond's recommendations would be considered and added: "The new admissions policies required in 2008 will remove a lot of pressure from governing bodies."

Mr Redmond's report showed that the school had been flouting admissions rules for years.

He said he had found "some of the most extensive problems and flaws with school admissions criteria that I have seen".

In common with growing numbers of over-subscribed schools, Lady Margaret had introduced a banded admissions system to ensure it has a "genuinely comprehensive" intake.

Pupils are placed in bands on the basis of results in ability tests and schools are required in law to take representative numbers from each band.

But the ombudsman found the governors were prepared to allow 27 per cent to be taken from the highest group and only 18 per cent from the lowest.

Between 2003 and 2005, some 17 per cent of pupils were admitted from the top band and only 12 per cent from the bottom.

The school was also found to be exceeding its legal quota of pupils scoring highest in English and maths ability tests.

The Department for Education concluded during the investigation that the arrangements were "not in accordance with the legal requirement" and "unacceptable".

Pupils applying for one of 50 "church" places -allocated on the basis of commitment to the Anglican faith - were required to fill in questionnaires spelling how they practice their faith.

Mr Redmond said: "Although the governors deny this was the case, it is possible the questionnaire may give an indication of factors other than knowledge of the Christian faith and could thus favour the more able child."