A £3.4 billion annual budget that covers all health education bar undergraduate medical education is under threat.
Workforce development confederations, which manage the multiprofessional education and training budget, are to be merged with strategic health authorities in April 2004.
Their chief executives will be demoted to directors of human resources, and many fear that the budget will be raided.
Andrew Foster, director of human resources at the Department of Health, has written to all confederation heads saying: "Given that confederations are crucial to the achievement of key workforce targets, it is important both that their relationship with the SHAs fully supports this work and that it is clear and transparent to everyone in the local health community and to partner organisations."
An attachment says that devolution of the education (MPET) budgets would not be automatic. "In order to ensure that investment in training is not compromised, MPET devolution will only be agreed where an SHA can demonstrate that MPET resources have been wholly deployed in support of education and training," it says.
But many chief executives fear that once budgets are controlled by the SHAs they could be compromised. Tony Butterworth, chief executive of the Trent confederation and vice-chair of the Standing Conference of Confederations, wrote to Mr Foster expressing concern.
Graham Saunders, chief executive of the West Yorkshire confederation, said:
"The functions carried out by WDCs are key to the delivery of the National Health Service Plan - an adequate number of staff with the right skills in the right place will make or break the ability of the NHS to deliver on targets. At the moment there is a lack of clarity about the move. Will WDCs effectively disappear?"
Barbara Walsh, chief executive of the South Yorkshire confederation, said:
"Confederations have developed a strong partnership approach with the NHS and universities. There is a danger that we will lose a tier of highly experienced people."
Paul Turner, of the Council of Deans of Nursing and Allied Health Professions, said: "The education and training funding must be ring-fenced securely."
Michael Powell of the Council of Heads of Medical Schools said:
"Confederations have developed a strong partnership approach. If chief executives in SHAs are put in control, then that positive approach could be lost."