UP to 125 jobs could be lost under plans to overhaul the city's school catering service.

Derby City Council is looking at two options to safeguard the service's future and cut costs by £800,000.

One option is for an external company to make frozen meals, which will be sent by a council distribution hub to schools for them to be reheated.

But this would mean the loss of 125 school kitchen staff who would no longer be needed to cook fresh meals on site.

The second option is for a private provider to run the service, transferring all the staff to it.

The council's cabinet will decide next Tuesday which option to approve. But as a short-term cost-saving measure, catering staff are expected to see their wages docked by 30 minutes' pay a day through a change to meal options from September.

Unison officials claim they have had no prior consultation and the options will lead to "reduced choice" for children. And head teachers have already expressed concerns that reheating frozen meals would lead to a loss in food quality.

Council leader Harvey Jennings said: "We have decided to review the current system as we don't believe that it provides the best value for money. The pre-prepared meals are fully compliant with nutritional standards and offer a wider choice than already available. Parents will be informed of the new meal system once a final decision has been made."

Derby's school meals service has a turnover of about £5.5 million each year and has had a deficit of between £80,000 and £370,000 for the past five years.

The projected loss for 2010-11 is £275,000, with each £2 meal costing £3 to produce.

Since consultation started at the end of last year, eight schools have opted out of city's meals service and are now providing their own meals and paying catering staff directly.

Lakeside Community School opted out of the city service at Easter. Head teacher Simon Emsley said most heads wanted to have fresh food available for children and not reheated meals.

He said: "We have sourced our own food to get the best quality and prices and we are able to cook it here fresh on the premises."

The council cabinet is also being asked to approve reducing the school meals option from three to two each day from September 1 to make short-term savings.

This would mean offering either meat or fish and a vegetarian option instead of all three at present. This would lead to an estimated £140,000 saving per year.

Nick Alverson, Unison assistant Derby branch secretary, said: "We have only just seen the options. We are very disappointed and we will be consulting with members to come up with alternative suggestions. It is too early to say if action will be taken."