Margaret Hodge, lifelong learning and higher education minister, has asked officials at the Department for Education and Skills to review the current system. Her call for tougher rules follows evidence that it is easier for colleges to sell the land than it is for schools under local education authority control.
The issue was raised by David Lepper, Labour MP for Brighton, following complaints from a pressure group opposed to the sale of three acres of land at Varndean, a sixth-form college, to help fund a pound;5 million expansion.
The college made the application for the sale - partly for housing - last summer but withdrew it in March when it became clear that planners would not recommend it to the local council.
The council planning report stated: "The proposal is considered to involve an unacceptable loss of playing fields and open space." The plan had provoked 2,500 protests.
Alan Jenkins, Varndean's principal, withdrew the application promising a review of post-16 education by Sussex Learning and Skills Council. But, he said, the college was trapped between a rock and a hard place, because he needed cash to fund a three-year expansion.
However, concern over the loss of recreational land has resurfaced in government, following evidence that a sharp decline in school sport has been mirrored by the sale of playing fields. Schools minister Stephen Timms last week revealed that English schools had netted pound;140m from land sales since 1998.
Mr Jenkins said when he withdrew the application that much of the cash was needed to improve the buildings, but 40 per cent was earmarked to cover an increase in student numbers. He asked where the money would come from, if not through the sale of land.
Mr Lepper said in a letter sent this week to all the protesters that Ms Hodge "did agree with me that the Varndean application raised wider educational policy issues which she is now asking her department and the Learning and Skills Council to examine and report on".
But he also makes it clear that he is sympathetic to the college's financial plight. He has urged ministers to address the "inequality of funding" for building works and extensions for sixth-form and FE colleges compared with schools.
He was optimistic that new regulations will ease the plight as the proportion of funds from central government had been raised from 35 to 50 per cent, with some "special category projects" funded up to 100 per cent.