Children still in nappies will be taught "fundamental British values," according to a policy announcement to be made by the new education secretary, Nicky Morgan.

In her first pronouncement since taking over following the demotion of Michael Gove, Morgan is to say she will allow local authorities to cut off state funding to nurseries that "promote extremist views" – including the teaching of creationism – and add the promotion of British values to the early years curriculum in England, covering pre-school education.

"One of the most important roles of the education system is that it should prepare young people for life in modern Britain. I am clear that public money should not be used to support any school or early years provider that does not support this aim because it seeks to promote ideas and teachings than run counter to fundamental British values," Morgan will say.

The announcement is to come as a response to a consultation on early years education, published on Friday morning.

The news follows on from the actions taken by Morgan's predecessor in the wake of the "Trojan horse" affair involving a group of schools in Birmingham.

The move is likely to raise alarm among early years educators at the politicising of nursery and daycare provision, as well as questions of practicality given the diverse range of childcare provision that receives state funding, including nannies.

Labour was quick to attack the move as a distraction, pointing out that "there is no concrete intelligence about individual nurseries that demands immediate action," according to the report.

"Morgan's first intervention is more headline chasing from a Tory government failing to focus on the most important thing in education: delivering a world-class teacher in every classroom," said a Labour source.

The new secretary of state is reported to argue that toddlers as young as two should be taught "fundamental British values in an age-appropriate way" to protect children from religious radicals.

Nurseries that teach creationism will also be ineligible for taxpayer funding under the proposals, although a government source told the Telegraph: "We are absolutely not saying, 'You can't teach Bible stories'."

Morgan's announcement is to be followed by a consultation next month, with the new rules likely to take effect next year.

"There can be no place for extremist views anywhere in the education system. The changes we are making today will ensure that all early years providers and schools are aligned with the need to protect children from views that are considered extreme," Morgan will say, according to comments circulated by the DfE.