Representatives from the council and the four secondary schools in Weston-super-Mare will be given seats on the governing body of Weston College when Weston Sixth Form College is officially opened in September 1999.
The scheme, which still needs Department for Education and Employment approval, has been hailed by Graham Lane, education chair of the Local Government Association, as the first example of a local authority moving into tertiary education since colleges' incorporation in 1993.
"It is very interesting that a small unitary authority should be the first to do this and I know that the funding council is watching it closely," he said.
North Somerset's director of education, Jane Wreford, and education chairman Leighton Greenham, took action after just half the 450 places at Weston's only sixth form, at Broadoak School, were filled this year.
Broadoak's sixth form has suffered from reduced curriculum choice, declining morale and an A- level points score of just 13.7 - well below the North Somerset average of 17.9.
Under the council scheme, the Broadoak sixth form will be run by Weston College under a management contract for the coming academic year, before being formally launched as a sixth form college next year.
Weston College principal Gary Williams says the sixth form will be run as a "discrete institution" so that A-level students who see FE as providing only vocational qualifications will not be put off.
However, the plans have attracted opposition from the National Union of Teachers with the union's divisional secretary Anne Lemon accusing the council of asset stripping. Eighteen teachers were made redundant from the school this summer and uncertainty about their future has prompted several more to take jobs at other schools, she said.