The inquiry will examine the growing waiting lists for courses, not only in inner-city colleges, but also in some rural areas where demand has outstripped supply for the first time.
It follows a report by the Office for Standards in Education and the Adult Learning Inspectorate which rated the quality of English for Speakers of Other Languages teaching in colleges as poor, with no sign of improvement.
The inquiry was announced by the National Institute of Adult Continuing Education. It will be chaired by Derek Grover, a former director of adult learning at the Department for Education and Skills.
Niace is concerned that there is a shortage of ESOL teachers and that those in post are sometimes unqualified and work part-time, with limited career opportunities.
Mr Grover said the inquiry will focus on the quality and quantity of courses and staffing. "ESOL is one of the biggest challenges we face," he said. "The demographic shift means that there is greater demand in the labour market for migrant workers.
"The enlargement of the European Union means that there are important new client groups to be catered for."
He said the inquiry will also look how ESOL relates to citizenship and employment.
He said, "We will be trying to identify clearly what can be done to improve ESOL work, including the quality of teaching, learning and achievement and to make recommendations on how, as a nation, we should pay for ESOL."
Jane Ward, Niace development officer, said an interim report on the inquiry's findings will be published during Adult Learners' Week in May, with the final report following in October.
She said the inquiry will gather evidence from ESOL students, teachers and managers in colleges, adult education services, prisons and the voluntary sector. A website will be created to seek views and report progress.
The Ofsted report, Skills for Life in Colleges: One year On, was published in October. It detailed how the quality of English courses for speakers of other languages has deteriorated, with nearly one third found to be unsatisfactory, compared with 26 per cent a year ago.