The Office for Standards in Education has discovered that the Learning and Skills Council has provided funding so that a small number of pupils can attend independent specialist schools after the age of 19.
In a report for MPs this week, Ofsted said: "We have raised this issue with the Department for Education and Skills and the LSC, who are clearly concerned about this finding and accept that school registration ought to cease at the age of 19."
The issue is the latest in a series of concerns that Ofsted has raised about independent special schools, which can charge up to pound;175,000 a year.
Last year the education watchdog reported that teaching was unsatisfactory in more than a third of the schools and that teachers often lacked awareness of the national curriculum.
In the new report, Ofsted said that its findings this year showed "little or no improvement in this provision".
Government's and Ofsted's Response to the Committee's Sixth Report is at www.publications.parliament.uk