Free schools are Michael Gove's 'pet project' - Labour
Labour has accused the government of wasting money on free schools, calling them "pet political projects".
The party was granted an urgent question in Parliament after reports of a coalition row over funding.
Shadow education secretary Tristram Hunt said ministers were spending "£400m to fill a black hole".
But Education Secretary Michael Gove said his rival had "more contorted positions on free schools than some Indian sex manuals I could name".
Free schools, of which more than 170 have been created in England, receive direct funding from the Department for Education and are independent of councils.
Set up by parents, teachers, religious groups and academy chains, they have priority for funds over other new schools.
Liberal Democrat sources say 30,000 local authority school places are being lost as money is diverted to free schools.
But Conservative sources respond that more places are being created overall.
The Lib Dems supported the creation of free schools, but in recent weeks growing tensions between the coalition parties have become evident.
According to sources in Deputy Prime Minister Nick Clegg's office, last December Mr Gove overruled the Lib Dem schools minister David Laws to take £400m from the Basic Need Budget for 2015-17.
They claim the money was diverted to help cover a projected £800m overspend between 2013 and 2016 in the budget for free schools - a project close to Mr Gove's heart.
Mr Laws was not present for Labour's question in Parliament. His spokesman said he had "pre-existing commitments" which could not be rearranged at short notice and that people "shouldn't read too much into it".
Addressing MPs, Mr Hunt said: "The coalition - both parts - has raided the schools budget to pay for petty political projects."
He added that free schools had been "underperforming" and that the education department was "spiralling out of control" under Mr Gove's leadership.
Mr Gove replied that standards were improving as a result of free schools being set up and said that there was no longer a shortage of places across England.
He added: "He has had more contorted positions on free schools than some Indian sex manuals I could name."
The education secretary said: "The truth about free schools is that they help children in areas where they've been let down in the past."
In an interview with BBC Two's Newsnight, Mr Gove's former adviser Dominic Cummings said: "In government I certainly did stop a great deal of Clegg's interference in school policy. He would routinely call demanding £100m for an unknown gimmick in a speech the next week. We told him to get stuffed."
Mr Gove's allies said the Basic Need Budget would still rise by more than £200m a year in 2015-17 and argued that expansion of free schools would lead to more school places overall.