Scores of vocational courses offered at Northampton College are now likely to be made available to students in Daventry.
Daventry Tertiary College with its more academic curriculum was struggling to meet local firms' needs and thousands of vocational students were having to travel 15 miles to Northampton.
The merger is thought to be the first sparked by the Government's Success for All paper last November which ordered local learning and skills councils to assess how FE colleges were meeting their area's needs.
Martyn Wylie, chief executive of Northamptonshire Chamber of Commerce, said: "Our research has highlighted the county's skills' shortages in both manufacturing and service sectors. The merger can only help to serve the needs of local employers better."
Daventry tertiary has concentrated on sixth-form education for south and west Northamptonshire.
Northampton College provides a near-complete range of vocational courses to 3,000 full-time and 20,000 part-time students. It is a centre of vocational excellence in childcare and is working towards the same standard in logistics, a boom industry aided by the nearby M1 and Daventry International Freight Rail Terminal.
Val Carpenter, director of learning programmes at Northamptonshire LSC, said: "We first started to look at the area because Daventry was running into financial problems. It did not have a critical mass of students and it was in danger of closure.
"But there was tremendous support for local provision so we looked for opportunities to link up with other colleges and Northampton came forward.
"One of the biggest benefits of the area review is that we have been able to look afresh at provision across the county and it gives us the option of some radical changes. We have looked at all aspects of education, pre-16 and post-16, where the joins are and where they should be."
The area review, carried out by Tribal Consulting, made 20 recommendations including the merger. It also suggested boosting manufacturing skills courses. Northampton already has a motor vehicle engineering course, helped by its location near to Silverstone and Formula One industry.
Once further planning and feasibility work is completed, the proposed merger will have to be approved by the Government.
England's other 46 LSCs have until spring 2004 to carry out strategic area reviews and submit plans.