Bury College, Bolton College, Oldham College, Oldham Sixth Form College and Hopwood Hall College in north-east Manchester have signed a statement signalling their co-operative intentions.
Salford, Pendleton and Eccles colleges are interested in joining the group.
Ray Dowd, the principal of Hopwood Hall College, said the aim was to achieve economies of scale and improvements in the quality of services being offered to students. It is also hoped to eliminate unnecessary duplication.
The first areas of collaboration will include looking at purchasing and supplying services and equipment jointly and at collective arrangements for quality and inspection.
The colleges may share best practice in governance and management and link information systems on learning technology. They also intend to work as a consortium in response to the implementation of Sir Ron Dearing's reform of post-16 education.
The group will also consider future collaborative funding bids for college development and collective approaches to issues such as widening participation.
There will also be some attempt to co-ordinate the curriculum offered locally. Mr Dowd said that the colleges have a list of programmes they are seeking to rationalise or deliver jointly and are keen to ensure, where appropriate, that students progress from one level of work in one institution to a higher level in another.
For example, he said, Oldham College has a wide range of Higher National Diploma courses which Hopwood does not offer, so the colleges have agreed that Hopwood students on intermediate level courses will progress on to Oldham's higher-level courses.
On the other hand, Oldham has agreed to drop its motor vehicles courses and direct students instead to Hopwood's more successful courses.
Mr Dowd says that it may also be possible to share centralised services, for example, the personnel function, to recruit lecturing staff centrally or to buy in services such as internal or external audits together.
He said that the Further Education Funding Council's policy of eliminating extreme differences of funding in colleges by 2001 meant that high-spending colleges were struggling to improve provision while also cutting costs.
One way forward was to eliminate duplication of local provision by collaborating with other colleges.
The co-operative agreement in Manchester differs from the plan in Birmingham to establish a community college in that the five Manchester colleges are not bound by a legal agreement, and no new corporation is being created.