The fund replaces the Further Education Funding Council tariff system which, in 19992000, provided pound;9m for childcare in FE. Margaret Hodge, the education and employment minister, said the fund was created after colleges had requested greater flexibility.

About 30,000 students should be assisted in 20001, but it will be up to colleges to decide how much support they allocate to individual learners. “Every college should receive funding,” said Ms Hodge. “Access shouldn’t be subject to a geographical lottery.”

The minister was speaking after a survey by the Daycare Trust showed that up to 3,000 students drop out of FE every year because of inadequate childcare facilities.

Three out of five of the 308 colleges that responded to the survey said they were aware students had left courses because of childcare difficulties. On average, collegs were aware of eight students dropping out for this reason each year. By extrapolating the figures across the sector, the trust believes about 2,700 students are leaving because they cannot afford childcare or because facilities are not available.

As many students who drop out fail to reveal why they leave courses, the true annual figure could be higher, said Chris Grover, author of the study and a lecturer in social policy and social work at Bradford University. “Parents made it quite clear that childcare is crucial to them returning to study,” he said.

Sixty-one per cent of colleges who responded provide childcare facilities. Eighty per cent open their facilities to staff and the wider community, but this means 38 per cent of their places are taken up by children whose parents are not studying at the college.

The new fund was welcomed by Ian Ashman, deputy principal of Hackney Community College, who said it should mean that fewer colleges have to subsidise childcare from their own budgets.