Details of the change, which aims to speed up closures and re-organisations by cutting bureaucracy, are expected in the FE white paper next week.
The LSC can currently only recommend closures, which have to be ratified by Parliament. Giving it the power to shut colleges would require legislation, either in an FE Bill or an amendment to the new education Bill which is to be scrutinised by MPs next week.
It is understood that ministers do not expect the LSC to use such powers often, because the proportion of colleges considered "inadequate" had fallen from 20 per cent to 4 per cent since 2001.
But the LSC's new power would enable it more easily to carry out radical reorganisation in line with school and college reforms expected under the new education Bill.
Previous closures as part of reorganisations have proved costly. When failing Bilston college in the West Midlands was shut, ministers tried to persuade neighbouring Wulfrun college to close and allow a new college to replace both. But governors refused, insisting that it was a well-run institution.
Other colleges have required considerable amounts of cash in order to be "persuaded" to take over weak colleges.
Other reforms now in the FE white paper and announced in the Budget include plans to pay for every person under 25 to take a first full level 3 (A-level equivalent) qualification if they wish to do so. At present the entitlement stops at 19.
This is expected to cost about pound;50 million and will be funded through staff cuts and efficiency savings at the LSC.
Evidence for the likely success of a strategy to target people up to 25 comes from the small-scale adult learning grant. It was aimed at adults under 30 who had underachieved at school. Most applicants for the grant were 22 to 25 years old and had been identified as late achievers.
The re-emergence of Individual Learning Accounts, reported in FE Focus last week is also certain to be in the paper. But the scheme is likely to be under tighter LSC control to avoid fraud, which led to ILAs being scrapped in 2001.