The number of families benefiting from help to buy school uniforms has fallen by a third in five years.
And only one in six councils plan to offer the grant in September.
In the last year 20,965 grants were handed out by local authorities – down from 31,183 in 2015/16.
There has been a similar fall in total school uniform funding over the same period, down from £1.24million to £825,000 in 2019/20.
An investigation by Lib Dem leadership hopeful Layla Moran showed that just 21 of 120 councils plan to offer a grant in the coming school year.
That means thousands of families facing financial hardship due to the coronavirus crisis will struggle to kit their children out for school.
Eight councils said they had stopped offering the grant within the past five years, with several blaming government cuts while others said charities had stepped in.
Ms Moran is calling on the government to increase funding for cash-strapped local councils so they can offer school uniform grants to all children from disadvantaged backgrounds as in Scotland.
There local authorities pay qualifying families at least £100 per child. She is also backing cross-party calls to make school uniforms more affordable.
Ms Moran said: “These figures are a badge of shame on this government.
“Struggling families will face an impossible choice between getting into debt or going without a new uniform for their child.”
Research by the Children’s Society found 1.7 million children attend school in badly fitting, unclean or incorrect clothing.
Earlier this year the Sunday People successfully campaigned to stop parents being forced to shop at one expensive supplier to cut the average £340 cost of uniforms for secondaries and £255 for primaries.
Ms Moran added: “No child should have to go to school with the fear of being bullied because of their family’s financial situation.”
Nearly one in six families say school uniform costs are to blame for them having to cut back on food and other basic essentials.