The organisation, which has been seen as the embodiment of further education since colleges became independent 11 years ago, was this week restructuring its London headquarters.

It is understood that the job losses will be among staff who are employed directly by the AoC rather than through its two commercial spin-offs which concentrate on management services and workforce development.

The AoC’s accounts show that administrative costs increased from pound;2.1 million in 2002 to pound;2.75m in 2003, but its turnover also rose from pound;7.7m to pound;8.8m during the same period. Staff numbers increased from 47 to 58.

The AoC’s surplus fell in that period from pound;418,00 to pound;41,000.

If this trend has continued since the last accounts were published, this would mean that the organisation ran at a loss in the year up to July 2004.

It is expected that the regions, which employ around 20 people in addition to head-office staff, will be asked to generate some of their own income in the future through commercial activities such as consultancy work.

The AoC has decided that its reserves, the difference between its assets and the money it owes, can be depleted to less than pound;1m.

According to the latest accounts, by July 2003 it held reserves of pound;2m, including pound;1.55m in cash. In the past, colleges have criticised the AoC for holding too much cash in reserve.

Without any mention of redundancies, the AoC this week said its board had “approved changes to the direction of the organisation which will strengthen its representation and policy formation roles over the next three years”.

In a written statement, John Brennan, the organisation’s chief executive, said: “AoC has also played a major part in supporting the sector as it has undergone a number of modernising and structural changes.

“AoC’s board now wishes to ensure that the organisation is fully shaped to meet the wishes and needs of its members over the next three years.

“Consequently, AoC will strengthen its representation, lobbying, promotion and policy- formation roles so that the sector’s voice can be further amplified on all the matters affecting it.”

The association’s recent campaign for improved funding for colleges prompted a last-minute U-turn by ministers who, having insisted that no more cash was available, found an extra pound;130m - primarily to pay for expanding the number of 16 to 18-year-old students.

It is understood that members of the AoC’s pay negotiating team could be among those made redundant.

Such a move would worry unions, which have relied on the AoC’s role as the employers’ representative in the current negotiations over lecturers’ pay.

But the cuts have cast doubt on the AoC’s ability to make sure the pay agreement is implemented by its member colleges.

Barry Lovejoy, head of Natfhe’s colleges department, said: “It is very regrettable if people are going to lose their jobs and we are concerned that the changes the AoC is proposing might mean a move away from their position as the employers’ representatives in industrial relations.

“There is nothing in their statement which mentions their role in the negotiations and making sure pay agreements are implemented locally.”