They are developing "customised" national vocational qualifications which allow workers to be trained in the workplace more efficiently than employers had previously found possible.
Thousands of brewery workers, bank staff and clerks have benefited from the schemes.
In recent years colleges have been criticised for deals which poured public cash into private training and condemned for failing to police courses or check quality. They have now turned to consultancy to create courses tailored to specific companies - and reaped the rewards in fees.
Standards of customised programmes is controlled by colleges. They meet all the costs and sellschemes to employers as a package at the market rate.It is an approach which fits the Labour Government's vision of colleges developing innovative courses for sale through the University for Industry.
The courses also meet the needs of many local firms and organisations which criticised national vocational qualifications for failing to take their needs into account.
A typical example is that of a deal between Birmingham City Council and Bournville College. Managers at the council finance department asked the college for help with staff training. The college developed a national vocational qualification in accounting and information processing for public finance staff. The new qualification was then accredited by the RSA and 45 staff were retrained within 10 months in a contract worth around #163;15,000 a year.
Frauke Marquardt, head of the business school, said: "Because it is customised, it means the candidates can produce evidence which is directly linked to the underpinning knowledge. There is nothing tenuous about it."
Two lecturers train in the workplace and line managers act as mentors and help staff gather the evidence they need for the NVQ. "One of the problems with some work-based NVQs is that, whereas the candidate may be keen, line managers do not always give them the necessary time," she said.
"In this case, line managers know the pressures candidates are under and give them full support."
Although designed to meet the needs of the council, the NVQ has since proved relevant to the health service workers and is being used by University Hospital Birmingham NHS Trust.
Skilldrive, a private company set up by West Nottingham shire Collegs, recently polled local industry to find out what companies wanted.
The result was an NVQ in paint technology for staff at Croda Mebon Paints.More than 20 staff have been retrained to NVQ level 2 (GCSE equivalent). Higher level courses are now being developed.
Roy Baldwin, director of Skilldrive, said existing standards had been tailored to meet the needs of the company which desperately wanted to give regular retraining of high quality. "Skills are very tight in the industry.It's a unique niche for us." Contracts with small to medium-sized firms such as Croda are worth more than #163;10,000 a year.
Skilldrive is typical of a college-based initiative that has had to think again about how it works, following the Further Education Funding Council's decision to take a tough line on franchising. Many of its programmes attract FEFC cash, but from August, the employers will pick up a bigger share of the bill.
Similar problems face Derby Tertiary College, Wilmorton, hit not only by tougher regulations but also by the Tory government's decision to scrap extra payments for college growth.
It has 5,000 pub staff from six independent breweries involved in retraining programmes.The project started last year when Marstons asked for help with training to support a rapid expansion programme. The NVQs from the hospitality awarding body for bar staff, cleaners and managers were reworded and repackaged to create a unique qualification for the company
Gordon Stewart, Wilmorton's director of business development, said: "Most of the material produced by the awarding bodies is not eye-catching. We wanted a high-quality package attractive to the company and the learner."
Some initiatives have led to unprecedented co-operation, a move which belies the claim often made that companies would rather poach talent than train staff.
Sixteen Nottingham- based firms, from national brewery giant Bass to small employers, formed a training consortium which is run from Brackenhurst, the local college.
Mike Dixon, a former lecturer, runs the consortium which "customises" NVQs in food and drink manufacturing to suit the individual companies, which then pay the full costs of each programme they buy.
National standards set by the industry lead bodies have to be interpreted for different companies, he said. "A unit which means one thing to a brewery may mean something totally different to a confectionery company," he said.