Prior Pursglove College and South Park Sixth-Form College in Cleveland are to merge amid fears of long-term budget cuts - creating a 1,400-student super-college, the largest in the north of England.
The merger was initiated last year amid fears that specialist subjects such as music and Latin could disappear because of cash constraints.
Stephen Whitehead, principal at Prior Pursglove, insisted the deal was not a rescue package to save either college.But he said the drive for ever-deeper efficiency savings could have threatened minority subjects if merger had not gone ahead.
He stressed that the institution would maintain a sixth-form ethos and remain an "A-level emporium".
"Both colleges are tightly funded," he said. "The so-called efficiency gains are beginning to choke us, so it seemed sensible for us to combine forces. We had been co-operating for a year and it seemed a natural link to make."
The merged college, which will retain both sites, is planning a Pounds 1 million investment in computing facilities. It aims to create a system that will be at the heart of an electronic network linking the six sixth-form colleges in the north-west.
Mr Whitehead said the college would develop its GNVQ work and begin offering more adult and part-time courses. But he insisted there would be no expansion into NVQs, allowing the college to retain its distinctive sixth-form identity.
"We do not see a blurring of the edges. There's a difference in ethos between sixth-forms and FE colleges, and the adults come to us regarding it as a sixth-form."
Staff have had to apply for jobs at the merged college, but posts have been lost.
The merger is one in a series of amalgamations in the area. Cleveland had nine sixth-form colleges at incorporation, but has already seen three merge.
South Park College's principal, Tony Simpson, who will be director of schools liaison, said South Park had faced financial problems since incorporation. "Cleveland has had sixth-form colleges for about 20 years and they are well established and popular with heads, parents and students. There are three FE colleges in the area, so it was decided to stick with the sixth-form college ethos and the 16-19 academic market as our core business."