Welsh councils could be given the power to propose changes to post-16 education -including the creation of new tertiary colleges and the closure of sixth forms at aided and foundation schools.
But the proposals are strongly opposed by college leaders, who say local education authorities have a vested interest in the survival of school sixth forms, and would not be able to act as "an honest broker".
Instead, they want an independent person to chair local committees considering post-16 reorganisations.
The Assembly government says councils should "take a lead in building a consensus" as to how post-16 education is provided in their areas, to "widen the range of learning opportunities and career choices for all young people".
Previously ELWa, the post-16 education funding agency, had the power to propose the opening or closing of sixth-form and college provision, with Jane Davidson, minister for education, lifelong learning and skills, making the final decision.
But ELWa's merger with the Assembly government in April has brought the powers to both propose and agree reorganisations into the new department for education, lifelong learning and skills.
Officials are anxious to separate the two roles, and say delegating the power of proposal to LEAs should enhance their strategic role in post-16 education. Consultations on the plans close on July 31.
fforwm, the organisation representing Wales's FE colleges, says it has strong reservations. It believes LEAs would find it difficult to act as honest brokers, because they ownJschools, employ staff at them and receive Assembly funding forJsixth forms. It says there is a stronger case for giving powers toJcolleges because they educate more under-19s than schools - 55,816 compared with 29,065 in 2004-5.
But what it proposes is that independent people should chair local committees looking at re-organisations or that proposals should have the unanimous agreement of all stakeholders.
Dr John Graystone, fforwm's chief executive, said: "We would like a list of suitable people drawn up who would be acceptable to all. We don't underestimate the difficulties but feel it would be fairer."
However, secondary heads want LEAs to have the power to propose reorganisations.
Brian Lightman, vice-president of the Association of School and College Leaders, and head of St Cyres comprehensive, Penarth, Vale of Glamorgan, said: "A policy of local solutions for local issues is preferable to a central one.
"This is something that LEAs are best placed to do for the whole spectrum of educational provision and the needs of learners in the area. Before costly structural changes are made, we need clear evidence that they will improve standards."
A spokesman for the Welsh Local Government Association said it broadly welcomed the proposals, as they fit with LEAs' wider responsibilities for school reorganisation.
"Collaboration at a local level is essential for any reorganisation of post-16 provision," he said. "Local partnerships are already working well and councils are engaging with key stakeholders, such as the FE colleges, as part of the 14-19 networks - all with the aim of providing the best possible opportunities for learners in Wales."
Five "pathfinder" projects proposing reorganisations of post-16 provision have been put on hold pending the consultation outcome. Two of the projects (in Merthyr Tydfil and Blaenau Gwent) involve sixth-form closures.
Delegation of 16-19 provision organisation proposals to local authorities consultation 2006, see www.new.wales.gov.uk * email@example.com