Employment minister Andrew Smith said the Welfare to Work scheme will allow jobless people to study even to higher education levels if they can convince officials that it will get them a job.

Mr Smith gave further reassurances that cash released in the switch from the 16-hour rule - currently limiting the time the unemployed can work without losing benefits - would not be clawed back but freed for FE expansion.

The three commitments, given in an interview with The TES, will help reassure many college managers who feared that the New Deal would mean FE on the cheap.

Colleges, grouped in consortia, were set to scoop contracts in all 14 New Deal pathfinder areas in England, Scotland and Wales as The TES went to press. They will trial schemes covering the three phases of the programme.

Four options are available. Every 18 to 24-year-old who has been jobless for six months will be offered three training options: a job with an employer, work on an environmental task force or work in the voluntary sector. A fourth option is full-time education and training at college. Help towards self employment will also be available.

Mr Smith said: “The FE option will provide for those who missed out on education and training first-time round and has been geared to take people to national vocational qualification level 2.

“But we have made it quite clear that where there is a demonstrable link between education and training for employability, leading to a job, there has to be flexibility to go to NVQ level 3 and beyond. There should be no limit. ”

Before the launch this week, Mr Smith visited all pathfinder areas. “I am reassured by what college heads have shown me that this will be a very high quality scheme,” he said. Echoing a pledge from Education and Employment Secretary David Blunkett, he said he would personally intervene if colleges failed to get the flexibility needed to help people “at every level of achievement” back to work.

He was anxious to ensure that Further Education Funding Council cash saved as students are recruited under the New Deal, should go towards widening access to ethnic minorities and others identified in the recent report by Helena Kennedy QC as excluded from FE.

“For example, where people (under the 16-hour rule) transfer to full-time courses under the New Deal, it releases cash for others. This will create opportunities.”

Funding would also be provided to cover additional teaching and study costs as students would increase their study time from 16 to 30 hours under the New Deal. A new cash banding scheme will reflect the costs.

Ministers have been in talks with the FEFC to give them a more central role in the New Deal both for the 18 to 25-year group and expansion to include the over-25s. “We will be announcing further details on education and training opportunities very shortly,” he said.

New opportunities already announced include opportunities for 10,000 adults who have been out of work for two years to study full-time, Pounds 195 million to help the disabled and additional help with education and training for lone parents.