The mayor’s flagship free school meals policy was dismissed as “smoke and mirrors” by critics after it was alleged no money had been put aside to pay for it.

An e-mail apparently sent by a senior council officer in response to a query from the Labour group says there is “no financial provision in the budget to fund this project”.

It adds money will need to be transferred from elsewhere in the budget by executive order from Mayor Lutfur Rahman, which could then need council approval.

But the mayor’s office disputed the claims, saying the policy was “fully budgeted”.

The confusion was seized upon by Labour, whose own plan for free school meals was rejected by the mayor in March as a “political stunt” that was not costed properly.

A new free school meals policy, later approved by Tower Hamlets, was emblazoned on the front of the council’s taxpayer-funded newspaper East End Life on March 31 under the headline “Free school meals for all primary kids”.

The story, published on the day of a BBC Panorama report that led to a government inspection of the council, claimed the £2.7million meals plan had been agreed.

Labour group leader Cllr Sirajul Islam said: “This is totally outrageous. Lutfur Rahman has gone around claiming to have introduced free school meals, yet he hasn’t allocated a single penny to pay for it.”

John Biggs, the mayor’s Labour rival in the May election, said: “The mayor needs to understand saying something is true doesn’t make it true outside of fairy stories.”

A council spokesman said: “On March 26 the council agreed a number of [funding transfers] to fund free school meals for one academic year.

“The council passed a funding proposal but, in line with standard council procedure, a final decision rests with the executive mayor.”

A spokesman for the mayor’s office said: “John Biggs clearly doesn’t understand how the mayor’s powers work.

“His claims are totally untrue – the mayor has fully budgeted for this project and the funding has been allocated.”