Gillian Shephard, Secretary of State for Education, has accepted two damning reports into college mismanagement and sacked several governors.
However, Mrs Shephard said the behaviour of governors at Wilmorton College, Derby, and St Philip's Sixth Form College, Birmingham, was "not typical of the further education sector as a whole".
The report on Wilmorton by Michael Shattock, registrar of the University of Warwick, concluded that the governors disregarded procedure and said nine of them should repay Pounds 16,760 in improper allowances. Mrs Shephard said the board bore collective responsibility for the mismanagement unless individuals had clearly dissented.
She sacked the remaining four governors who served under former chairman Stuart Webb, with the exception of staff governor Brian Bonsall.
Acting principal Tim Parkes, a recent appointment to the board, was also spared.
However, under the Shattock recommendations, Mr Parkes will be replaced by an acting principal from outside the college, chosen by the new governors.
"There is widespread relief that the Government had not been influenced by legal threats from Stuart Webb," said Mr Bonsall, the Natfhe branch chairman, who has resigned as a governor on Mrs Shephard's advice while the new body is formed. "I resigned because I did not want to be responsible for stopping the college moving forward," he said.
While accepting the report on mismanagement at St Philip's, Mrs Shephard decided not to remove any of the current governors.
"The governors who remain have all been in post for a very short time," she said.