Kevin Brennan, further education minister, has said too few students are getting jobs after attending college - despite official figures showing they are as likely to progress as university students.
Mr Brennan revealed that the Department for Business, Innovation and Skills (BIS) would provide incentives for courses in subjects where economic demand was strong, in response to false claims that college- leavers were more likely to be unemployed than in work.
He announced the plans after being confronted with a BBC report claiming that fewer than 9 per cent of college-leavers found work, while a slightly larger number were unemployed. The most likely result from attending college, according to these figures, was to take another course at the same level.
Mr Brennan said: "What you do - and this is why we're looking at reviewing the skills system at the moment for our new strategy paper this autumn - is look at where you place resources and what kind of incentive you can put in place for people to want to opt for areas that the economy is going to need in the future.
"We have to make it more relevant, and get up the numbers of people who can actually get into work out of further education."
But the report was based on a survey from the Learning and Skills Council (LSC) that was out of date. It also used a sample less than a tenth of the size of more recent figures and was only intended as a test run of the data-gathering systems, not to provide a reliable account of student destinations after attending college.
In fact, about 40 per cent of college students are in work after completing their course. In total, 84 per cent either find a job or progress on to another course, while the equivalent figure for those completing their first degree is 85 per cent.
David Hughes, LSC national projects director, said some college-leavers are recorded as taking a course at the same level, but many of those would simply be progressing from the AS to the A2 year or to the second year of a BTec, which would appear in the system as beginning another course at the same level.
"I don't think there's much evidence that lots of people are being recycled on to courses at the same level and just being kept in college for the sake of it," he said. "We would expect that to be picked up at inspection.
"There are an enormous amount of young people going from college to university - 39 per cent of the entrants to higher education."
Mr Hughes said there was also a danger of holding the college system to a different standard to other parts of the education world, where it was accepted that education was a benefit in itself, and that students would not necessarily take a fixed path into subject-related jobs.
"I've got a geography degree, but I didn't become a geographer," he said.
A BIS spokeswoman said Mr Brennan accepted the newer figures on student destinations, but said the FE system needed to adapt to a fast-changing economy.