A “car crash” between two worthy government policies has left schools, local authorities and families scrambling to avoid missing out on valuable education funding for disadvantaged pupils.

Council leaders described the collision between two new government education policies – the introduction of free school meals up to the age of seven, and pupil premium payments to help schools teach pupils from poor backgrounds – as wasteful and inefficient.

Pupil premiums are awarded partly on the basis of the number of pupils receiving free school meals, but since the government introduced free meals for all infant schoolchildren in September, authorities have been left struggling to convince parents to apply for them in order to qualify for the funding. The pupil premium is worth between £1,300 and £1,900 per child at primary school.

Some schools have resorted to offering prizes to eligible parents to convince them to continue to sign up for free school meals. Councils and schools spoken to by the Guardian say the introduction of universal free school meals for all pupils in reception, year 1 and year 2 has removed the incentive for eligible parents – those on benefits with a household income below £16,200 – to sign up for free school meals, since their children now receive them regardless.

This Wednesday is the annual census deadline for state schools in England to sign up parents whose children are eligible for the pupil premium – an annual payment introduced in 2011 and championed by the Liberal Democrat leader, Nick Clegg.

At Starbank school in Birmingham’s Small Heath area – where more than 40% of the school’s 1,000 pupils are eligible – the executive headteacher Gerry Hudson said more of the onus was on schools to target parents.

“It’s true to say that because of universal free school meals we are having to put more effort to make parents aware of eligibility,” Hudson said. “If you are in a disadvantaged area, one of the ironic consequences of providing children with free school meals means there just isn’t the incentive for parents to sign up. Schools do now have to do more chasing.”

One officer at Surrey council said: “It was hard enough to persuade parents to sign up in the first place. But this is a bloody car crash.”

A DfE spokesperson said: “The way pupil premium is calculated has not been affected by the introduction of universal infant free school meals [UIFSM]. However, as early as April last year we began preparing schools and provided best practice advice. We know from areas that already offered UIFSM that it is still possible to identify pupils that attract pupil premium funding, for example through their enrolment processes.

“There continues to be a very strong incentive for parents to sign up – the £1,300 per child means significant extra support for their child.”

Before the approaching deadline there has been frantic activity by councils and schools to get parents to sign up – including some unusual tactics. Several councils – including Merton and Newham boroughs in London – have adopted a policy of pushing all parents to sign up for free school meals, whether eligible or not, to ensure that as many as possible qualify for the premium.

A message from Merton tells parents: “Even if you are not eligible for the scheme right now, circumstances may change during the 12 years they are at school and they may need some support in later years … Should your circumstances change at any time, we can take care of everything.”

Oasis Academy Nunsthorpe – a large primary on an estate west of Grimsby – gives away a £25 book token to eligible parents who sign up for free school meals. Councils such as Oxfordshire have relied on persuasion tactics in letters to parents: “Please register so that our school doesn’t miss out on vital money to spend on your child’s education … Just imagine what we could do for your child with this money, and how the lack of it would affect what we do.”

While 11% of eligible pupils fail to sign up nationally, rates vary dramatically between local authorities. Some 29% of eligible pupils in Surrey and 22% in Essex are not signed up, according to the most recent figures – a combined total of 11,000 pupils who miss out.

Ray Gooding, the council’s cabinet member for education, said: “Essex county council has provided support and guidance to schools in helping them to identify those pupils who qualify for pupil premium funding.”

Lincolnshire failed to sign up an estimated 27% of eligible pupils in 2013, which would cost its schools almost £5m in lost pupil premium funding if repeated next year.

“Schools are aware in Lincolnshire of the possible confusion parents might have with the universal free school meals initiative and thinking they don’t need to sign up – they have been working very hard to capture as many families as possible in order to promote free school meals and the pupil premium as they have direct contact with parents,” a spokesman for Lincolnshire county council said.

A Liberal Democrat source close to the schools minister David Laws said: “The pupil premium and infant free school meals are two of the policies Liberal Democrats are most proud of – they would simply not have happened without us in government. As such, there is absolutely no question of us standing back and letting schools lose out.

“Schools have consistently proved the naysayers wrong on this policy, and over the last year have had a huge amount of information and guidance on how pilot areas successfully managed the change. That said, if this does prove to be a problem, we will take further action to fix it.”