Speaking to the Commons Education and Employment Select Committee, Mr Blunkett indicated that cash from fees would not be reserved for higher education alone. He said: "I believe the resources should be directed back into lifelong learning." Vice chancellors had demanded the cash to be ring-fenced to secure the quality of university education.
Meanwhile, there was new hope for colleges' short-term cash crisis. Mr Blunkett said: "We are also looking separately at finding more resources for further education and we will make an announcement later this year," he said.
Officials have indicated that colleges could benefit from cash saved from a review of spending within the Department for Education and Employment, the source of some of the extra money given to universities this week.
Principals are hoping Mr Blunkett's speech at the Association of Colleges conference in November will contain some good news.
Privately, senior AOC figures are optimistic that ministers will plough extra money into FE to ease the stringent year-on-year efficiency savings.
AOC chief executive Roger Ward said: "David Blunkett and (education minister) Tessa Blackstone remain fundamental good friends to the FE sector and I'm hopeful that the next stage will be beneficial to us.
"The crisis in FE is considerably greater than the alleged crisis in higher education. Our needs are real. If there are not more significant funds for FE the crisis will deepen and the ability of colleges to deliver Labour's programme will be damaged."
Colleges estimate they need around Pounds 115m this year - significantly less than Pounds 165m awarded to universities this week - to stave off cuts and meet student demand.
But the recent Kennedy report on further education called for costly measures to bring more people into college, indicating the need for substantial extra funding.
Professor David Melville, Further Education Funding Council chief executive, said: "This money for higher education has been triggered by the Dearing report, and schools were looked after in the budget.
"We are awaiting some recognition of the demand Kennedy has identified for further education, which we know is there and is not being funded."
Alan Tuckett, director of the National Institute of Adult Continuing Education, also welcomed the extra funds for higher education, but said cash was urgently needed to help people on low incomes.
He said: "This is good news for adults in higher education, but there's an urgent need in FE. Access funds are jolly good in higher education but there's much less money for hardship in FE and the need is there.
"The economy needs a vibrant HE sector but you should not do it at the price of the dispossessed."
Colleges stand to gain from a Pounds 4m expansion of sub-degree courses announced this week. Minisisters hope to create 1,000 new HND and HNC places.