It is understood that hundreds of millions of pounds would be needed next year if Mr Blair's target is to be met - cash Chancellor Gordon Brown is unwilling to sanction at this stage.
And there are fears among leading academics in the further education field that the recruitment figures will be massaged by accrediting workplace training that is already taking place.
Senior Government sources confirmed that Tony Blair and Gordon Brown blocked this week's planned White Paper launch because it contained too little on standards and examinations.
Mr Blair is also understood to have told senior advisers the paper offered too little for the middle classes. One source said the document was a "dog's breakfast".
Any hope of reaching the 2002 expansion target was now very remote, and would require some "fixing", said Professor Ian McNay, head of further education teacher training at Greenwich University. With 1,800 students, it is the largest school of FE teacher training in Britain.
"Tony Blair has promised 500,000 new students by 2002. The only way he can do that is by bringing into the University for Industry those workplace trainees who could be registered as students," he said.
"We have looked hard at the proposals and, given the repeated delays to the promised White Paper, we can see no way - other than fixing the figures - that the Government can reach its targets."
Alarm at the downgrading of the White Paper was widespread among key figures in colleges, universities and local education authorities.
Graham Lane, education chairman of the Local Government Association, said he was seeking a meeting with Education Secretary David Blunkett to clarify the situation.
He heard the paper had been scrapped last Thursday. He said: "The fact that it was dropped so suddenly and that it has been delayed so many times has caused a lot of anxiety. We are hoping that this is not a sign that they are going to abandon these principles. They must come back to lifelong learning with a major piece of legislation. "
Professor John Field of Warwick University, Britain's first professor of lifelong learning and a member of the Fryer advisory group, hand-picked by Government to draft a blueprint for the White Paper, said: "There certainly needs to be a consistent message from Government that they believe lifelong learning is vital, and this is not a good start. If it was an essay I would send it back for revision."
David Blunkett, the Education and Employment Secretary, is understood to have fought to save the proposals, which are now contained in consultation documents due to be published on February 25. One senior Government source told The TES that the final paper would be a hybrid GreenWhite Paper.
"The chief reasons for halting the launch were the poor content of the paper, which appalled ministers. It did not have the coherence and punchiness the Government wanted in a White Paper. "
Dr Kim Howells, minister responsible for the lifelong learning consultations, denied that there ever was a fixed date for the White Paper.
Ruth Silver, principal of Lewisham College, said: "We have all been waiting months and months and months for this White Paper. Ministers must now really up the ante on this. The Green Paper or whatever they call it has now got to be truly wonderful."