At least 48 colleges in England are involved in merger talks, according to the Further Education Funding Council which has reported a surge of interest at the end of 1997.
The spate followed the Government's exhortations to cut competition and increase collaboration, said David Melville, chief executive of the FEFC.
"David Blunkett (the Education and Employment Secretary) has made clear his view that rationalisation is important and wants the council to advise on promoting collaboration and mergers," he said.
Professor Melville will announce sweeping reforms giving the nine regional committees of the FEFC considerable control over cash - set aside from the extra Pounds 83 million given by Mr Blunkett - to encourage collaboration and merger.
He predicted that 1998 would be the long-awaited year of mergers, five years after colleges left local authority control. "Some 34 colleges have completed mergers since incorporation," he said. "The pace is already quickening with 48 colleges, to the council's knowledge, currently engaged in merger discussions. "
In addition to mergers, new-style collaborations are taking off. In Birmingham and Greater Manchester, groups of five colleges are seeking closer co-operation to pool resources and share services, eliminating what they see as wasteful duplication of administration, bureaucracy and courses.
"The promotion of mergers is therefore likely to result in a further increase in the numbers which require consideration by regional committees," Professor Melville said. He proposes that each committee could offer "impartial chairmen" to assist in the merger and collaboration talks.
As the Government moved to set up regional development agencies (RDAs), the FEFC committees should play an increasingly important role to ensure the effective co-ordination of additional cash available to colleges in each region, he added.
The council has been in talks with the Department for Education and Employment on how best to use Pounds 26 million "pump priming" cash which the Government has set aside to help achieve greater cost effectiveness and efficiency in the regions.
Many colleges are concerned that they will be given little or no say in the shaping of regional development for education and training programmes under the new RDAs.
But Professor Melville insists that they can a have a powerful impact. He has told FEFC regional committees to ensure a more "effective and co-ordinated" use of additional monies available from a range of sources such as the European Social Fund, training and enterprise councils and the single regeneration budget.
"You could use these funding levers to pull in order to meet the needs of the local population in particular areas," he said. In a series of meetings with principals in December he said the FEFC was eager to get more advice from the colleges.