In the first parliamentary debate on the report since it was published last month, Ms Hodge told MPs that the system of student support in further education was "close to collapse".
Funding of full-time equivalent students in FE had decreased by 27 per cent in the past four years, compared to a 13 per cent reduction in funding to higher education students.
"If we are serious about widening participation and improving skills we must address the issue of student support," she said. Access to such support had become a "question of geography rather than need" with maintenance awards dependent on the area in which a student lived rather than the course they were following, a situation that was "simply not acceptable".
The recommendation - one of 50 in the report - that child benefit for 16 to 19-year-olds in full-time education be redirected to give an extra #163;600 million to support those in FE would act as a financial incentive to keep more young people in education, Ms Hodge said.
"It is outrageous that only half of our young people continue in full-time education up to the age of 18. It is unacceptable that the participation rate has failed to increase over the past five years, and it is shameful that we have fewer people in full-time education than any of our international competitors."
The #163;10 million allocated by the Further Education Funding Council to widen participation was "derisory and grossly inadequate". And franchising arrangements should be brought under tighter control to curb excesses.
"Allowing a free market in FE in the name of consumer choice is nonsense. FE should be more actively planned, nationally and locally, to ensure the most effective use of resources."
With the results of Labour's comprehensive spending review expected next week, Ms Hodge made a clear appeal to the Treasury to fund the changes recommended in her committee's report.
"Out there in the colleges - among the staff and among the students - people are waiting to play their part in turning the Government's vision into reality. That will require money, commitment and effort. I hope that our inquiry and our report will set that ball rolling, and that FE will gain its rightful place in the educational landscape."
Charlotte Atkins, Labour MP for Staffordshire Moorlands, backed the call for extra resources, describing the underfunding of FE as "a bit like progressive arsenic poisoning - if one waits for the symptoms to show it is too late".
She supported the recommendation that the FEFC intervene more readily in college management and said the "unhealthy control" exercised by the previous principal and chair of governors at Stoke-on-Trent College had led to cuts in courses and staff.
"What shocked me most about the whole episode was the hands- off approach of the funding council. Even when it was alerted to the problems several times by staff at the college it refused to intervene," Ms Atkins said.
Michael Foster, an FE lecturer for six years before becoming Labour MP for Worcester, said people stop referring to the "Cinderella" sector. "We owe it to all our students and would-be students no longer to use that term; we should value more highly that crucial part of our education system."