Michael Gove will cut more than pound;120 million from school sixth forms, putting courses, student places and jobs at risk, under plans outlined in the schools white paper this week.
The education secretary intends to end the funding gap between school sixth forms and further education (FE) and sixth form colleges, slashing schools' post-16 provision by around pound;280 per pupil.
The move was labelled "disastrous" for maintained school sixth forms by the Association for School and College Leaders (ASCL), adding that 16-18 education in schools will be placed under "enormous pressure".
The news comes as the Government gave its backing to plans to raise the compulsory participation age of pupils to 17 by 2013 and 18 by 2015. But without a real-terms rise in 16-19 funding, schools will be expected to do more with less.
A source close to Mr Gove said ministers realised the move would put pressure on schools. "Since the comprehensive spending review - and we secured a 0.4 per cent rise for schools in their five-to-16 provision - we have always acknowledged that it was going to be tightest for school sixth forms," the source said.
If the proposals contained in the white paper, The Importance of Teaching, become law the changes will be phased in from next year, in a bid to "increase value for money for the taxpayer".
But Martyn Coles, principal of the City of London Academy in Bermondsey, said it could stop schools opening sixth forms.
"I am a firm believer in school sixth forms and this will have a significant impact on them, especially academies which are just building them up," Mr Coles said. "I will be lobbying the Government very hard to make sure this proposal does not go through."
ASCL general secretary Brian Lightman condemned the Coalition's plans, warning that they put at risk the "tremendous success story" of school sixth forms, which currently educate around 430,000 pupils.
"We know there is an inequity between school sixth form funding and that of FE and sixth form colleges, but if the Government is to address that inequality then it must bring colleges up to the level of school funding," Mr Lightman said.
"Making cuts of this size will have disastrous implications for schools at a time when post-16 education is under enormous pressure. Any reduction of funding of this magnitude will lead to reduction in staffing. It will absolutely be the case that it will lead to job losses.
"It will also lead to a reduction in the choice of courses available. If you offer fewer courses then students might not be able to do the courses they need to do, and therefore they won't get the education they need."
The decision has been welcomed colleges, however, which were glad to see the end of the "unfair" funding disparity.
Julian Gravat, assistant chief executive at the Association of Colleges, said: "No one is happy to see other people's funding go down, we obviously would have preferred for us to go up. But we're now moving in the right direction to ensure equity between colleges and school sixth forms, and we welcome the fact that the white paper acknowledged that the current funding system is inherently unfair."
David Igoe, chief executive of the Sixth Form Colleges Forum, added: "We could never see the logic for why there was a difference in the first place. Clearly school sixth forms will find the new funding arrangements challenging.
"Colleges went through this process in the late 1990s and everyone felt that an increase in class sizes would have a negative effect on results. But that didn't happen, and this could be an opportunity for schools."