Sixth-form supporters have been left "nervous" after a new study revealed FE colleges boost the Welsh economy by pound;553 million.
The case for keeping traditional sixth forms open could also be weakened, following a glowing report from Wales's chief inspector Susan Lewis.
In her annual report, launched last week, Ms Lewis reported that 93 per cent of provision at FE colleges in Wales is good or better, and 36 per cent of it is outstanding.
The new research, by Cardiff university, concludes that the institutions are the "anchor" of Wales's lifelong learning agenda and economy, compared with higher education institutions.
But this does not bode well for schools, currently locked in battle with FE colleges for the best students and funding.
FE colleges offer more choice to students, with more emphasis on vocationally-led courses and qualifications, pivotal to the success of the work-related 14-19 learning pathways.
Ms Lewis was also critical of the lack of teamwork and trust between school and college leaders as they competed for places in her report for 2005-6.
She said it amounted to a "lack of vision".
Elaine Edwards, policy officer for Welsh-language teaching union UCAC, said the results of the latest report, The impact of Further Education Institutions on the Economy of Wales, could hinder the case for traditional sixth forms, seen as essential to strengthening Welsh-medium education.
"Sixth forms are still a much better place to be for welsh-medium education," she said.
It is also thought that the findings will affect an ongoing independent review of the FE sector in Wales, led by former University of Glamorgan vice-chancellor, Sir Adrian Webb. Jane Davidson, minister for education, lifelong learning and skills, said the study will prove very useful to the review.
An Assembly government spokesperson said any research relevant to FE will be considered.
John Graystone, chief executive of fforwm, which represents the 25 FE colleges and institutions in Wales, said the report was timely, following the Leitch review, which lamented the skills gap in the UK economy.
The study found that the purchasing power of the institutions, with their staff and students, supported more than 11,800 full-time jobs and is worth Pounds 553m to the economy.
Mr Graystone said: "fforwm is keen to work with the Assembly government to secure a solid investment in the future."
The government says the FE review will be "holistic" and include an analysis of FE and its role in post-16 education. The findings are due this autumn.