Schools in Bradford were today warned they could face massive compensation claims from bullies and their victims because of "nightmare" new human rights laws.

Education insurance specialists, Smithson Mason Group (SMG), said the legislation could leave schools having to defend actions by both bullies and the bullied alike.

And an SMG survey of a cross section of the district's schools showed that around two thirds of teachers did not realise the full implications of the 1998 Human Rights Act which comes into force on Monday.

The company, used by Bradford Council, warns schools failing to deal with students who bully and are violent could be seen as tolerating the behaviour.

This in turn could lead them to being found guilty of inflicting "degrading treatment" on the victims.

Head teachers may be forced to take drastic action against disruptive pupils, such as exclusions, if they are to stay on the right side of the law.

But they also face parents of excluded children being able to sue schools under the act if they feel their child has been treated unfairly.

Karen Brennan of SMG said that, to reduce the risk of action from bullies' parents, schools should make it clear to everyone that bullying was not tolerated at any level and they had the right to exclude offenders.

Bradford secretary of the National Association of Schoolmasters and Union of Women Teachers, Ian Davey, said: "This could be a nightmare. I don't think that many schools will be aware of it. I feel a little bit unsure of it myself because it has only just happened."

Bradford National Union of Teachers secretary, Ian Murch, said the legislation highlighted the need for Bradford Council to re-examine its policy towards bullying in all circumstances.

But head teacher at Hanson School, Tony Thorne, said there was no need to panic. "I have been a head teacher for a long time and legislation like this comes through every week," he said.

"If that is the law we will have to work within it. But I would be amazed if schools weren't on the ball with their bullying policies anyway."