NVQs are being abandoned as the "gold standard" of work-based education in favour of a system that the qualifications regulator admits is untested and is yet to prove its worth.
In the biggest overhaul of vocational qualifications for 20 years, NVQs are due to be folded into a new three-tier system of vocational awards, certificates and diplomas made up from stand-alone credits representing 10 hours of learning.
Officials expect the successor qualifications to be primarily known by new titles under the Qualifications and Credit Framework (QCF) by 2010. Using the National Vocational Qualification title will become optional.
Colleges, which back the greater flexibility of the new system, awarding bodies and employers will be able to develop competing qualifications with different levels of quality, although they will have to gain industry approval to receive public funding.
Approval would have to be given by the sector skills councils, which represent employers.
Employers in industries such as construction and manufacturing say the change undermines their attempts to establish NVQs as a universally- accepted qualification.
Nick Gooderson, head of training and qualifications at the sector skills council ConstructionSkills, said: "It was agreed that NVQs would be the gold standard for labourers right up to architects and quantity surveyors. It's the licence to work in our sector.
"What message does this give to employers or those who are working towards the qualifications?
"NVQs are accepted, they are a benchmark of competence.
"A huge amount of work and effort has gone into making employers understand them. The danger is that all that is being lost in favour of an unproven system."
In Scotland, by contrast, the equivalent SVQs have been retained as a distinct qualification.
Ofqual, the new regulator for qualifications, said it was not clear whether the framework proposals would be an improvement and their implementation would need to be closely monitored.
A letter signed by Isabel Nisbet, acting chief executive of Ofqual, said: "The tests and trials identified that many of the key processes of the QCF are yet to be fully tested and that most of the benefits are anticipated rather than realised."
But colleges back the new system, arguing that it will enable them to provide the qualifications that students and employers want.
Joy Mercer, quality manager at the Association of Colleges, said: "It gives more choice, and it gives more flexibility to put together a programme that serves the needs of learners and employers. People are changing jobs, changing the sector they are involved in."
NVQs are at their highest point of popularity for 10 years, with nearly 700,000 awarded each year.
But research by the Qualifications and Curriculum Authority in March this year found their reputation was variable.
Those who knew NVQs well had a high opinion of their quality. But the research found most employers knew the qualification less well. Some supported it strongly while others viewed it poorly.
A spokesman for the Department for Innovation, Universities and Skills said Ofqual introduced changes to allow the NVQ title to be retained because of the high reputation it had in some sectors, and this was likely to continue for as long as it was valued by awarding bodies and employers.