They will be able to set up schools for 16 to 19-year-olds, continue to have the same direct interest in planning sixth-forms and sit on the local learning and skills councils.
"You know what learning opportunities individuals and the wider community need," Malcolm Wicks, the lifelong learning minister, told the Society of Education Officers' conference.
"Nothing in our proposals will undermine this important role. In fact, the role of local authorities will be expanded - with opportunities to influence the planning of all learning, not just non-vocational."
Ministers will be looking to councils for practical help on any issues that arise from the transfer of funding to the Learning and Skills Council (LSC).
And Mr Wicks said: "It is important to ensure minimal disruption and continuity of funding - safeguards will be put in place on condition that student numbers do not fall.
"Local authorities are in a unique position to ensure greater coherence between pre-16 and post-16 learning. To help bring greater choice of opportuniies locally and to encourage more continuity and progression."
Nowhere was this more vital, he said, than in areas of high levels of drop-out and disadvantage.
The Government estimates there are 170,000 young people not in education or training and Mr Wicks said: "Whatever we have done right in the past we have not done enough for those young people.
"You don't have to be very bright to realise that unless we do something then the consequences for that group of young people as individuals is calamitous."
A new youth support service, aimed at bringing together existing services, will provide a network of trained personal advisers for disaffected, disadvantaged young people.
The advisers will work closely with the LSC, employment service, schools and colleges and where necessary arrange access to specialist services such as health, drug treatment and housing.
"The teenage years are a time of major transition. A stage when many young people are particularly vulnerable," said Mr Wicks.
"We are determined to take action to ensure that all young people receive the support and guidance they need - when and wherever they need it."