Welsh colleges could lose out under plans to create a single funding and planning regime for post-16 education and training in Wales, it emerged this week.
The green light has been given for a single body along the lines of England's Learning and Skills Council. Its role would be to create a level playing field for all post-16 institutions. This could mean further education colleges having their funding raised to sixth-form levels.
But the National Council for Education and Training for Wales, Elwa, which will oversee a pilot of the system, warned that there could be winners and losers, with sixth forms likely to be hit hardest.
Elaine Allinson, head of funding policy for Elwa, admitted that some colleges could lose out but said that institutions would be encouraged to collaborate to help soften the blow of any cuts.
Ms Allinson said: "We do not want to destabilise providers but to ensure that learning is accessible and funding is equitable across Wales."
Welsh education minister Jane Davidson gave the go-ahead for the system to be piloted for a year from August.
Fforwm, which represents 25 further education institutions in Wales, said the move would need to be "watched carefully" in the wake of a poor financial settlement for next year that leaves colleges with a £5 million shortfall. It could mean the loss of about 200 jobs, course closures and the shelving of capital programmes.
Fforwm's chief executive John Graystone said that Welsh further education colleges could not afford to lose the opportunity to have their funding raised to the same level as school sixth forms.
He said: "Our concern is whether, when push comes to shove, the National Council will follow through with these difficult decisions that will involve it spending large sums of money."
Elwa, which came under fire from the auditor general for Wales last year over the financial mismanagement of training projects, presented details of the system to the education and lifelong learning committee in December.
It was criticised by committee chairman Peter Black, who claimed the proposals carried a "hidden agenda" to close down school sixth forms by extending Elwa's powers over them.
Under the system, funding will be based on a common credit framework for qualifications, with weighting for different subjects, areas of the country with high levels of educational deprivation and disadvantage, students with learning difficulties, and teaching in Welsh or bilingually.