Plans to give up to Pounds 1 million extra to every London college will be decided by the Further Education Funding Council next month -without consulting the 370 non-London colleges.
The decision to compensate colleges in the capital for higher costs - salaries in particular - has the support of the sector. But the move to sidestep wider consultations has infuriated non-London principals.
They insist that, in the light of the cash limits imposed on further education colleges and the estimated Pounds 231m shortfall that the sector faces nationally this year, the London funds should be new money.
Many principals have been pressing for the rest of the sector to be consulted over the decision of a special inquiry team last month to recommend the extra cash. But the request has been rejected by the council.
The decision to bypass wider consultations was confirmed by Patrick Rooney, head of the FEFC West Midlands regional office, in a letter to principals last week.
"It is intended that the proposal to the tariff advisory committee at its meeting of October 17 should go to the December meeting of the council without prior consultation with the sector," Mr Rooney wrote.
"This does not, however, preclude the council from decisions to change the proposal or to ask for sector consultation."
Last week Education and Employment Secretary David Blunkett announced to the Association of Colleges' annual conference in Harrogate an additional Pounds 83m to stave-off cuts.
Part of the cash must be used to bring in up to 80,000 new students in line with recommendations by Baroness Helena Kennedy to widen college intakes to include more minority and excluded groups such as disaffected school- leavers, women returning to learn and the unemployed.
Andrew Middleton, principal of Stamford College and a member of the special inquiry team - the FEFC London costs group - told The TES: "I'm surprised and very disappointed at this news. It would appear to be contrary to the spirit of collaboration and partnership which was emphasised by Professor Melville at the Harrogate conference. It also falls short on any test of transparency and openness."
Mr Middleton broke ranks with the inquiry team two weeks ago when he condemned the proposals for the massive extra subsidies. Writing in The TES, he said it was fundamentally unfair to single out London and not give cash to other metropolitan colleges.
"I specifically emphasised in the London costs group the importance of consulting the whole sector on proposed increased weighting for London colleges. This is important on the principle of transparency, justice and on the practicality that an increased allocation to London colleges from a fixed cake must lead to reductions for all other colleges.
"It's an unfortunate way to handle such an important issue."
Principals in London reacted angrily. One commented: "No other service is as badly treated on London weighting allowances as we are. The Metropolitan Police get 29 per cent of the national budget for just 14 per cent of the population. "
Another said: "This is in no way a generous settlement. Others do a disservice to the sector if they snipe at us simply because colleges as a whole are underfunded."