Further education colleges are preparing for cuts in next month's spending review that would mean they face up to 80,000 job losses and see up to 800,000 places in education lost.
Such swingeing cuts to the sector - which currently employs 263,000 staff and provides two million places - would have major repercussions for the wider educational landscape, specifically school sixth-forms and sixth- form colleges.
The Association of Colleges (AoC) has briefed principals that the Government is modelling cuts of 25 per cent and 40 per cent in real terms over four years for its adult skills budget.
It expects real-terms cuts to the 16-18 budget of 10 per cent to 25 per cent.
And it fears that college budgets could see a further cut with the Treasury removing pound;400 million for unemployment programmes and apprenticeships given as additional grants over the last two years.
Julian Gravatt, assistant chief executive of the AoC, said under these circumstances the funding for colleges would fall by pound;300 million to pound;400 million each year until 2014, equivalent to 15,000 to 20,000 jobs. Just over half of colleges' 263,000 staff are teachers and lecturers.
Trade unions suggest that even with cuts at the lowest estimate of 25 per cent, more than 33,000 jobs would be lost in total and class sizes would rise by nearly a third.
Mr Gravatt said: "It's going to be bad. Colleges were already financially weakened by the capital problems last year. Ministers have made it clear that they are not averse to universities or colleges going bust, but it's not clear how far they will push it.
"We'll be left with provision for apprenticeships, basic skills, students with learning difficulties and some token community learning."
Even core programmes such as apprenticeships are likely to suffer, as expensive engineering and construction courses become less viable, he said. "All you'll get will be apprenticeships in customer service," he said.
The University and College Union, which represents most lecturers in FE, said it would resist the cutbacks. Barry Lovejoy, the union's head of FE, said: "It's not good for employers, it's not good for the communities we serve and it's certainly not good for FE and adult education which has already has a massive round of cuts.
"There's a real danger that we are damaging the infrastructure of the whole service and we won't be able to replace it."
The crisis in FE funding is also likely to have knock-on effects in schools as colleges urge ministers to make savings in the Department for Education's budget by cutting the amount of funding per school sixth form student, currently about nine per cent greater than colleges receive.
AoC said it believed its arguments on this point were "gaining increasing credence with ministers and officials".
Martin Ward, deputy general secretary of the Association of School and College Leaders, said collaborative programmes with colleges and schools, including the Diploma and other vocational programmes, were also likely to suffer as they were often subsidised by colleges.
He said: "When you have a very difficult choice to make and if they are laying off their own staff as a number of them will inevitably have to do, they will be reluctant to spend outside the circle of their own employees."