Government sources this week moved to scotch press rumours that the council would be abolished as a result of Education and Employment Secretary David Blunkett's post-compulsory education reforms.
Officials conducting the review are based in Sheffield, leading to speculation that the new body, will be based in the city.
In fact senior council officials are "looking to take an option on a vacant plot of land" adjacent to the existing headquarters, the source told The TES.
Funding council staff also report that the Coventry building has been "crawling with men with tape measures and checklists" from the Department for Education and Employment.
Government sources refused to comment but indicated strongly that the FEFC was the front-runner of all organisations - including the training and enterprise councils - to lead the new post-16 funding body.
A spokesman for the FEFC, said: "We on the council can see no reason for moving from Coventry. We can see no practical or political reasons for such a move."