Alan Milburn, the Chief Secretary to the Treasury, told a London conference that the FE sector would be opened up to private finance initiatives.
By the end of the year he estimated 14 per cent of the public-sector capital projects would be financed through PFI schemes, "combining private-sector enterprise experience with public service values".
In the FE sector there were already seven projects worth pound;37 million, which would release more money for frontline services.
With the publication of new guidance from the Treasury on PFI contracts this week, Mr Milburn said many of the problems of private financing would be resolved.
"PFI should not be a secret process because it is about providing better services. We have taken action to give a fairer deal on pensions for staff transferring between public and private sectors and we have resolved the thorny issue of the accounting treatment of PFI deals," he said.
George Mudie, the lifelong learning minister, said the planned 20 per cent increase in students, mainly adults, over the next three years would mean that college childcare could be contracted out and new computer systems could be set up and managed by private companies.
The minister also said that new campuses would be needed in city centres to reduce social exclusion.