A survey of primary and secondary school teachers showed 28 per cent did not know what the top priority was for the extra funding awarded for each disadvantaged pupil.
The results supported claims the initiative was not doing enough to close the gap between the most privileged children and the most deprived.
A report by the Sutton Trust said the payments, which are attached to children receiving free school meals, was having a limited impact on the poorest pupils.
Almost 1,700 teachers were asked about their plans for the premium.
Fewer than three per cent said they would use the money on the most cost-effective way to boost standards, including allowing pupils to teach their classmates and give feedback on students’ performance.
One in 10 said the money would be used to increase one-to-one tuition while 13 per cent said it should fund extra teaching assistants or teachers.
Eight per cent said their priority was to use the money to offset budget cuts elsewhere.
Reducing class sizes was the most pressing use for the money according to 15 per cent.
Earlier this year, research by the National Association of Head Teachers (NAHT) found just a quarter of schools said the pupil premium would make any difference to children’s education.
The scheme, championed by Nick Clegg, will be worth £1.25 billion next year but more than half of head teachers said it had not made up for budget shortfalls.
The Sutton Trust said teachers needed more help in allocating the extra funds.
Sir Peter Lampl, chairman, said: "If the billions of pounds allocated through the pupil premium are to genuinely help improve the results of poorer children then we need to ensure that teachers receive the best guidance on what works in the classroom."
A Department of Education spokesman said: "We trust professionals on the front line to do what is best for their pupils. We will not tell teachers how to spend the pupil premium, but we will hold them to account for what they achieve with it.
"From September, schools will have to publish information showing how they have spent the pupil premium and what the impact of that spend was in narrowing the gap between rich and poor students."
