Michael Gove, the education secretary, will next week be forced to announce a dramatic scaling back of the Tories' landmark plans to create a new generation of schools run by parents and voluntary groups.

Labour tonight accused the education secretary of presiding over a "chaotic shambles" after it emerged that as few as 20 free schools are on track to open in September 2011. In June Gove hinted that 700 could be established.

Ed Balls, the shadow education secretary, said: "This is another embarrassment for the education secretary's flawed, unfair and unpopular school reforms. Michael Gove took over a successful department which has helped to deliver record improvements in school standards over more than a decade, but in just a few months he has managed to turn it into a chaotic shambles."

Gove said in June that he had been inundated with expressions of interest from establish a new tier of free schools. "More than 700 expressions of interest in opening new free schools have been received by the charitable group the New Schools Network," he told MPs.