Awarding bodies have been accused of operating a fee-fixing cartel in a damning report which calls for greater regulation of qualifications.
The attack, supported by leading principals, highlights college concerns over the activities of the organisations which were criticised last year for a steep hike in exam fees.
The awarding bodies responded by fiercely defending their operations and denying collaboration over setting fees.
The report from Lewisham College registrar Julian Gravatt says cash-strapped colleges are being held to ransom by bodies which award qualifications such as the Business and Technology Education Council, City Guilds and the Royal Society of Arts .
It adds that the further education funding system, which gives cash to colleges in exchange for qualifications, guarantees income to the awarding bodies. Colleges were allowed to award certificates themselves before new funding rules.
Though the awarding bodies compete for business in some qualification areas, in others there is none. They can pass on costs to colleges in the form of higher fees. The study also questions whether the sums spent on advertising by the organisations can be justified as a use of public money.
The Joint Council of Vocational Awarding Bodies, which BTEC, City Guilds and RSA established last year, is accused in the report of paving the way for the three to agree fees.
Mr Gravatt cited a response issued by the joint council to the 23 per cent fees increase imposed by BTEC last year. "If they don't set fees together, why do they defend them together? They do seem to act in concert. If double glazing manufacturers worked in concert they would get the heavy boots of Government on them."
City Guilds spokesman Andrew Sich said there was "absolutely no collusion at all" over fees. He said: "We are being criticised for being commercial organisations, but one of the prime characteristics of commercial bodies is that you don't allow your competitors to have any inkling about pricing. "
John Tate of BTEC said the report contained misunderstandings and contradictions - it claimed awarding bodies were competitors, yet described them as working in a cartel.
But the report findings were strongly endorsed by Michael Austin, the principal of Accrington and Rossendale College in Lancashire.
He said: "I am sure it is the case that there is a fees cartel. It is true that in colleges we are at the mercy of these awarding bodies, which just do what they like, cashing in on the national obsession with getting certificates. "
Principals say they feel caught by the awarding body structure which purports to be competitive but is too limited to provide real choice. Sheffield College principal Ken Ruddiman backed the report's call for the Department for Education and Employment to monitor awarding bodies.
He said: "I think the hike in fees with no justification is nothing short of a scandal. I could live with a monopoly regulated by the department or a market-place, but not this."