Colleges have secured a change of heart from the Government after it pledged to try to fund unaccredited courses where they helped unemployed people re-enter education.
John Denham, Secretary of State for Skills, sought to enlist delegates at the Association of Colleges (AoC) conference in the Government's battle against recession and rising unemployment.
He said he would explore ways to give colleges their wish for more flexibility to recruit unemployed people who were not ready for nationally-recognised qualifications.
But he said colleges would have to demonstrate that the students were helped into work, and they would be expected to continue to seek qualifications through the free, work-based Train to Gain scheme.
Mr Denham told delegates on Tuesday: "You all know the seriousness of the economic challenges that your communities face. So now, more than ever, investment in the role of colleges is hugely important.
"When someone is facing redundancy or, often these days, they are let go at the end of a contract, they need to know that colleges will be there to help them with advice and support as well as education and training.
"I want to free up mainstream capacity and funds from within the system so that you are able to help."
Mr Denham also said that he had been lobbied hard by colleges seeking greater flexibility to run courses for the unemployed even if they do not lead, at least initially, to a recognised qualification.
"So what we will do is explore with colleges and providers ways in which budgets can be used flexibly . this will include exploring ways the funding approach can reward colleges or providers where they are able demonstrate helping learners into work," he said.
Mr Denham has asked the AoC to produce a guide for further education that will collate best practice and ideas for practical courses and meaningful training for those out of work.
But the Skills Secretary stressed that the new flexibility, designed he said to deliver training under "challenging conditions", did not represent an abandonment of the flagship Train to Gain policy.
Critics have complained that traditional adult learning suffered devastating cuts to pay for the work-based training scheme, which has had disappointing enrolments.
"My sense at the moment is that most colleges are engaged with Train to Gain . some, however, have still not entirely accepted the direction of travel and perhaps would prefer it to go away," he said.
"I want to say to those colleges - Train to Gain is not going away. I want 100 per cent of colleges to be fully engaged with it."
Mr Denham announced what he described as a Pounds 30 million "last chance" pot of cash to help colleges work more closely with employers and deliver the education and training they need and to tap into the extra Pounds 350 million made available to small and medium-sized employers to help them weather the recession.
He also announced a relaxation of Train to Gain rules to allow funding for bite-sized chunks of learning that fall short of a full course.
Graham Moore, principal of Stoke-on-Trent College and chairman of the 157 Group representing large colleges, said: "I welcome any moves away from the madness of salami-slicing funding and colleges should take Mr Denham at his word and go ahead and run these courses.
"Much now depends on how the Learning and Skills Council interprets the funding flexibility, but we will definitely create a real stink if our members get into difficulties over this."