By Sean Coughlan
BBC News education correspondent
Giving parents money to set up schools has become a political battleground
Children's Secretary Ed Balls has rejected a call from a parents' group wanting to set up a new secondary school in Kirklees.
There have only been three applications for parent-promoted schools since legislation made this possible four years ago - with only one approval.
Mr Balls says that opening the parents' school would have undermined the viability of a planned academy.
The Conservatives say Mr Balls has backed "bureaucrats not parents".
Parents campaigning for the new school say they "feel cheated" by the decision.
'Not a free lunch'
The decision on the proposed school in Birkenshaw, Kirklees, highlights a key political divide in the forthcoming election.
Ed Balls says there is "no free lunch" on parents setting up schools
The "free schools" policy put forward by the Conservatives would make it easier for parents, or other providers, to get funding to set up schools - using the money which would have been allocated for places in state schools.
They argue that this will provide more choice for families frustrated by the places currently on offer.
But Mr Balls set out what he saw as the cost of such a policy.
He said this would fragment the local organisation of schools and sharing the budget would have a negative impact on other schools.
Where there was already a surplus of places, it would be a "poor use of resources" to set up another school.
There are currently 793,000 empty places in the English school system.
"We're very supportive of new schools where there is a need. But it's not a free lunch," he said.
"There are consequences. There will be a cost to other families."
He said that allowing groups of parents to take school funds to to set up their own school "would be to the detriment of other schools and children".
Mr Balls suggested that this could mean parents with pupils at independent schools setting up their own schools using state funds.
He also challenged the assumption that parents wanted to set up schools.
"Local parents might want a new school - but they don't necessarily want to run the school," he said.
Michael Gove says parents are not getting the schools they want
Mr Balls also argued that academies which had proved successful had often faced initial hostility from some parents.
The free schools policy would mean the "biggest centralisation we've ever seen" - with the schools secretary having to evaluate bids for parent-run schools, he added.
The rejection of the bid in Kirklees followed a report into the proposals commissioned by the schools secretary.
Lesley Surman, of the BBG Parents' Alliance campaigning for a new school, said: "We feel let down. We haven't had the support we needed, we haven't been listened to."
Conservatives' schools spokesman Michael Gove said that "too many parents don't get the schools they want".
"It is only the rich who can guarantee the kind of education they want for their children either by going private or paying for a mortgage on a house in the right catchment area.
"Ed Balls says he wants to give parents more choice and control of their schools but when the crunch comes he's let down a group of dedicated and hard-working parents in West Yorkshire."
The Liberal Democrats have called the Conservative free school plans as "misguided".
"The idea that making it easier for new providers to open schools will drive-up standards across the country is a nonsense. Their policy will also be costly and they haven't fully explained where the money will come from," said a Liberal Democrat spokesperson.
The schools secretary also announced his support for the opening of two local authorty-backed secondary schools in London - in Lambeth and Wandsworth.
As well as the single parent-promoted school made possible by the 2006 legislation, there are only believed to be a handful of other state schools set up by parents.