Oxford Learning Centre, run by Swindon College, closes at the end of June with the loss of 10 staff. Its 400 students will be allowed to complete their qualifications in Oxfordshire FE colleges.
Three years ago, as well as learning centres in Swindon, the college ran sites in Cirencester, Reading, Slough, Bristol, Oxford and one in partnership with Basingstoke College of Technology. The expansion was a legacy of franchising, which had left the college with funding for more courses than it could deliver locally.
But it says changes in government policy, alongside the introduction of the 47 local learning and skills councils, has made it difficult for colleges to provide training outside their own area. The emphasis is on local providers meeting local demand.
Swindon College is funded by Swindon and Wiltshire Learning and Skills Council but Oxfordshire is in another LSC area.
The college now plans to open two new learning centres in Swindon, said a spokesman.
Abingdon and Witney College, North Oxfordshire College and Oxfordshire County Council have agreed to take on all 400 students to complete their courses.
"The Learning and Skills Council has taken swift action to ensure that no trainees suffer," said a spokeswoman for Milton Keynes, Oxfordshire and Buckinghamshire LSC.
Swindon's network of learning centres angered some principals, who branded it unfair and complained to the then Further Education Funding Council.
All the centres outside Swindon have since closed or been taken over by local providers. Oxford Learning Centre offered computer training at levels 1 and 2, basic skills and a range of other online courses.
"It was a terrible shock, though there have been rumours with other centres closing," said tutor Chris Morgan. "But, as far as we knew, we were doing all right financially and we have plenty of students.
"It's a shame. It's probably been the most successful of all the learning centres. It's done what the Government wants, which is reaching people who don't go to other educational institutions and getting them learning."