Universities will play a part in the "comprehensive reform" of 14-19 education and training outlined by education secretary Estelle Morris this week.
They will join schools and employers as key partners in area reviews of further education, which are to be conducted from next year by local learning and skills councils and colleges.
The reviews, which will build on information gathered by Ofsted, will identify where provision needs to be improved or new courses introduced. But they could also mean colleges having to make some "tough decisions" about whether to continue offering some subjects or types of provision, the secretary of state warned.
Government proposals contained in a consultation paper, Success for All , aim to encourage colleges to develop more focused missions that concentrate on their strengths and on local needs. In some cases, this will lead to colleges working more closely with universities to fill gaps in higher education participation.
The government expects the Learning and Skills Council and the Higher Education Funding Council for England to jointly improve progression of learners into higher education, the paper says.
Launching consultation on the proposals at the Learning and Skills Development Agency annual conference in London this week, Ms Morris said changes were needed in the sector to address the "very, very, very wide range in quality" and to give colleges a stronger sense of mission to cater for the needs of students and employers.
Although the secretary of state and the LSC would have the power to intervene where provision was not up to scratch, the process of review should be conducted through local negotiation and brokerage.
"What area reviews are about is creating an atmosphere and ethos against which you make the decisions yourselves. It is for you to take the tough decisions," she told delegates.
The paper includes proposals to address the quality agenda, which has developed into a battleground between ministers and college heads over the past year. A new standards unit is to be established by the Department for Education and Skills.
The LSC is to develop a full range of new performance indicators, including measuring the "value added" by learning, as well as improvement targets for student success rates.
There will be more training for college lecturers, managers and support staff, and new teaching and learning frameworks for all major curriculum areas.
Ms Morris said she did not want to tie her hands on lecturers' pay before the comprehensive spending review, but she announced a £43 million package to boost capital funding and help drive up standards.
Conservative and Liberal Democrat education spokesmen, Damian Green and Phil Willis, immediately denounced this as a re-announcement of old money.
The sector has been given until the end of September to respond to the proposals, which are expected to be finalised in November.
College heads had feared ministers would try to force a divide between 14-19 and adult provision.