Cumbria Learning and Skills Council had argued that a single site in Carlisle would offer a greater choice of courses and address the mixed performance of five school sixth forms in the county.
But the plans would leave some rural students stranded, one Cumbria MP warned.
The scheme has now been scrapped after consultation with schools and colleges.
A Cumbria LSC spokesman said: "Council gave detailed attention to an alternative proposal presented by headteacher representatives of the Federation of Carlisle Schools."
The federation has set targets for the improvement of results and retention rates in the schools. The LSC says all parties are now working towards "greater collaboration."
The LSC and Cumbria County Council will monitor the improvements over the next two years.
The LSC spokesman added: "We are pleased that the outcome is a universal agreement that participation, achievement and curriculum choice need to be urgently improved."
However, Cumbria's four general further education colleges still face a merger to save on administration costs.
The local LSC's attempt to bring colleges and schools closer together follows a comprehensive review of post-16 education in the county carried out by Jim Donaldson, former chief inspector of post-16 education.