The Learning and Skills Council is clamping down on fraud that could cost the taxpayer millions of pounds as cases emerge at the rate of four a month.
Special investigators are probing a growing number of fraud allegations in which the amount of money involved ranges from about £500,000 to tens of millions of pounds.
Almost half of the allegations that the LSC's special investigation unit is examining were reported by whistleblowers in colleges or with training providers. Nearly three-quarters involve colleges, and about the same proportion concern either funding overclaims or falsifying student numbers. Most of the rest involve breaches of financial regulations or poor corporate governance.
Geoff Snell, who leads the investigation unit, said the number of allegations was likely to rise. "We have been in business for a short time. It is possible there will be more referrals and that we will see a case curve that will climb and then begin to fall as the number of referrals works through."
The LSC is handling 33 cases of alleged fraud and financial irregularities, but no one has been charged yet. It is trying to recoup £500,000 from providers and pondering legal action in some cases.
The LSC has arranged seminars for colleges and training providers to point out warning signs of fraud. Mr Snell said cases often begin with simple mistakes but escalate in cover-up attempts.
He said: "We feel it is extremely important that we work closely with providers so that they are aware of the issues, are able to spot potential breaches and act quickly to nip them in the bud. It is in everyone's interest that we clamp down on fraud and irregularities."
• Private learning providers joined shadow education minister Alistair Burt in presenting a letter to prime minister Tony Blair on Tuesday condemning the government's handling of individual learning accounts.