Well-managed colleges which reach student exam targets for the three years to September 1998 will be allowed to apply for “accredited status”. They will be distanced from the four-yearly round by the inspectors, who will only keep a light touch on the tiller.

Jim Donaldson, chief inspector of colleges, said: “I think it will be a considerable incentive for under-achieving colleges to improve their performance.”

Inspections have been criticised by colleges for being bureaucratic and by the Further Education Funding Council for being costly, at a time when funding from the Government has been cut.

An answer to both criticisms was found through a self-assessment scheme already in place in Australia. Colleges with rigorous and effective management and good control over quality will be able to apply for accreditation. The inspectors will then make fewer demands and switch attention to monitoring and advisory work in colleges which need help.

A final decision on what will be a far-reaching change to the inspection regime has still to be taken. After six weeks of consulting colleges, Mr Donaldson will give his verdict on the plan in September.

But it is unlikely to meet much resistance. In consultations last year, 97 per cent of principals backed the idea of accreditation - giving those colleges a mark of excellence.

The carrot-and- stick approach remains, however. The colleges must regularly publish evidence of high standards and performance for students, parents, industry and the public. Those who fail to hit targets laid down by the FEFC can lose their accredited status.

There will be no automatic entitlement to accreditation. Colleges will have to put themselves forward and a panel of peers from other high-performing colleges will sit in judgment.

A college will be able to apply for accreditation at any time of the year,even if it has had a poor report and still has a while to wait before its next full inspection, Mr Donaldson said. “If the college feels it has fulfilled its action plan adequately, it can apply mid-cycle.”

Many college principals had welcomed the ideas behind the Australian scheme but felt they penalised arbitrarily those at the wrong point in the four-year inspection cycle.

The independent panel of peers is the part of the package of reforms which is likely to cause most consternation. But rigorous checks and balances will be kept to prevent any abuse.

“If a member of the panel’s own college comes up for accreditation, we would expect them to declare an interest and play no part in the assessment,” said Mr Donaldson.

“We will look at a range of individuals from well-managed colleges to join the panel. Some will be from the very best, others from those colleges which are well-managed but might take a time to reach accredited status.”