Herefordshire college of technology originally said it had to divert some funding to meet shifting skills targets. The Learning and Skills Council said the proposal to cut courses for students with disabilities came from the college. There had been no change in LSC policy.
The college said that its expected funding agreement would have affected several programmes which are not a high priority for the LSC, including some designed for students with learning difficulties.
Talks with the LSC are continuing and funds should be made available next year.
However, Chrissie Halls, head of the faculty of education, had fears for the longer-term: "We have exceeded our targets and are now being penalised.
We have worked for years with care homes and voluntary organisations to help these vulnerable young adults."