Only 24 councils out of 117 paid grants to all students for 1993-94 by the target date of October 10. Bottom of the league table was Westminster, which failed to pay a single grant by that date. At least 10 per cent of students from 43 authorities were still waiting for their grants at the beginning of term.

The report says: “Most councils performed with a high degree of efficiency. But a handful of councils achieved timely payment of grants in less than one in two cases.” Since most councils used similar schemes, anomalies could not be explained by differences in workload, the commission argues.

Councils bottom of the league insist say they had unique problems. Neville Coulson, deputy director of Westminster, blamed an antiquated computer - now replaced - and a surge in applications.

“The trouble with the Audit Commission figures is also that they are out of date. If you look at the figures for 1994-95 we come top of the league with 100 per cent.”

But universities and the National Union of Students say the commission’s figures reveal deeper problems with grants and insist that the date of October 10 is inadequate.

Louise Clarke, spokesperson for the NUS, said: “With new-style semesters and modular courses coming in, many students start in mid-September and they need the grants then. The start of university is a traumatic enough time, without this added anxiety.”

The Universities and Colleges Admissions Service recently proposed taking over grants from LEAs. The Committee of Vice-Chancellors and Principals is more sceptical. A spokesman said: “LEAs have a lot of expertise which it would be foolish to discount.” Its own investigation had indicated that the situation was improving.

The Audit Commission’s efforts to set a performance indicator for discretionary grants to FE students have angered the colleges, as the Commission failed to come up with urgently-needed information on the level of funding and cuts.

The commission had agreed that LEAs should be allowed to set their own targets, based on local definitions of discretionary grants. Next year, they will be asked about the amount of cash and overall numbers of awards approved.

Ngaio Crequer, communications officer for the Association for Colleges, said: “The commission has missed a major opportunity this year, at a time when discretionary awards are very high on the agenda. We feel disappointed that it is failing in its public duty on this.”

Many of the big shire counties, accused by colleges of decimating grants, appear from the league table to have allowed given grants to all applicants. The commission had asked for details of new major discretionary awards “where the application was eligible under the authority’s scheme for such an award. ”