Newcastle College, Tyne and Wear, is charging some students exam fees in a move being condemned as a dangerous precedent while cash-strapped colleges seek to balance budgets.
The law states tuition must remain free for students up to 18, but places no bar on colleges charging for other course costs, including exam fees.
But MPs and the National Union of Students say the policy contravenes the spirit of the law, and the union claims the practice of extracting cash from 16 to 18-year-olds through "hidden" charges is already widespread in the further education sector.
Bryan Davies, Labour's FHE spokesman said the fees were a "major deterrent to students" which he feared would spread nationwide.
Though Newcastle is believed to be the only college to admit to charging these fees, rumours are rife of others following suit. The NUS alleges more and more students are being asked to pay general national vocational qualification registration fees, and cites college "membership fees", said to vary from Pounds 5 to Pounds 50, as another example of charging students.
And Writtle Agricultural College in Essex is far from unusual in charging a Pounds 20 annual campus service fee towards car park security and hardship fund costs.
Newcastle College, which insists it makes its policy clear to prospective students, means tests the families of 16 to 18-year-olds and bills better-off candidates for A-level and Business and Technology Education Council fees.
The total bill for a student taking four A-levels might be as high as Pounds 100, but the college is unable to provide an exact figure when courses begin because the fees charged by the exam boards change year by year.
Liberal Democrat education spokesman Don Foster condemned the charges as "yet another sign of the lengths colleges are forced to go to because of financial hardship".
The action seemed ludicrous in the context of other areas of the sector offering incentives including cash and foreign trips to students, he said.
Newcastle College managers have strongly defended the charging policy, saying it stems from an anomaly in the college's funding arrangements dating back to before incorporation in 1993.
They say the college never received funding from Newcastle education authority to cover exam fees, which were paid directly to students under the authority's discretionary award scheme.
At incorporation, the Further Education Funding Council established the college's budget on the same basis, with no fees element built in. Students whose family's net income totals more than Pounds 14,000 are now asked to pay their own fees. Other students' charges are covered by the college's financial help scheme. Last year roughly half the students in the age group fell outside the no-fee bracket, paying out some Pounds 100,000 between them.
Vice-principal Phil Knight said remitting exam fees "willy-nilly to all" would have forced the college to make cuts elsewhere, hitting students from low-income families as well as the better off. "We felt that was not morally acceptable," he said.
Newcastle is to review its policy.