David Melville, chief executive of the Further Education Funding Council, told its annual conference this week that money would be available from the Standards Fund for the new lecturers, plus some "modest" restructuring.
He added though that real money to improve pay for existing lecturers, had to come from funds already announced for 2001-02.
He was upbeat about what he called a significant improvement in the financial health of the sector. Despite the early years when colleges had to show efficiency gains, the number of colleges in the weakest financial health category peaked at 96 in 1997 while 57 was the latest forecast. This is the lowest figure since 1993-94.
Professor Melville said: "The additional funds provided by the Government this year have undoubtedly helped but they do not totally explain the improvement.
"This change has been achieved by sensible management by college principals who have not been afraid to take tough decisions to reduce expenditure and to raise the finance needed to move their college out of the red."
He also praised academic achievements. More than50 colleges - around half those inspected last year - were outstanding in at least one aspect of work. The best colleges were frequently outstanding all round, he said.
"This positive picture is a clear antidote to the few colleges charactersied by frequent grade 4s from inspectors. Some did make the headlines in a way which was uncomfortable for the whole sector, but the inspection evidence is clear that they do not characterise the sector as a whole.
"These findings must also be set against colleges striving to widen participation, improve student retention and raise levels of achievement - all with a measure of success."
The sector, he said, had been set "extraordinary" targets to achieve 700,000 more FE students by 2001-02. "What we need now is to loosen the shackles, take both feet off the brakes but this time in a more regulated and sector-wide legitimated period of growth."
The council will allow colleges to claim funding for short basic skills programmes, reducing the minimum length from nine hours to three. The minimum length for council-funded day courses for employers or adult learners will go from nine hours to six.
They will fund shorter courses in basic computer literacy and related programmes.