Ofsted chief Sir Michael Wilshaw has claimed that poorer students are still missing out on support, despite the pupil premium policy.
The flagship scheme was launched in April 2011 to target poor students in England, providing £488 per pupil at the time, which was then upped to £600 in 2012/13.
However, Sir Michael said it was a 'real worry' that the £600 supposed to support underprivileged students was being diverted to 'tarmacking playgrounds'.
An Ofsted report found that half the schools thought the pupil premium was having a positive impact on raising achievement, but few could provide evidence to back this up.
Speaking on BBC Radio 4's Today programme, Sir Michael said: 'We found that over 50 per cent said that it was having either little or no impact on the way they organise and manage their schools in relation to the use of money on poor children.'
Schools minister David Laws has said the government does not want to 'micro-manage' schools, but that they would be held accountable for how the money is spent.
'Critically, while we're giving those schools freedom to use the money as they think best, we are also putting in place an accountability mechanism which will ensure that they use the money in the right way,' he said.
The news comes on the back of a difficult summer for the government in terms of eduction, with the GCSE grades scandal still rumbling on.