a package of measures including protected funding for colleges are being set up to ensure that principals have considerable autonomy despite the new funding role for local education authorities.
Steps being considered by ministers include protecting budgets for groups of colleges and introducing more precisely targeted funds for buildings and capital projects.
These are similar to measures already in place to give schools autonomy within local authorities.
Bill Rammell, the further and higher education minister, made the Government's intentions clear in a Commons debate on the future of post-16 education and training to reassure colleges that there will be no return to the old LEA dominated days of FE.
Local authorities have also been told that it will be at least three years before they take control of funding of any of the work of colleges. Legislation before Parliament, giving colleges degree-awarding status and powers of intervention to the Learning and Skills Council would go ahead, he said.
Mr Rammell added that the Further Education and Training Bill would ensure that the LSC had the powers needed for the next three years to make further and adult education more responsive to employer demands. Other reforms, such as the raising of the leaving age and following government response to the Leitch review of UK Skills, would come through new laws.
He said: "There will be a need for further legislation. However, a move to demand-led funding [which responds to the needs of employers] does not require more legislation. The proportions of demand-led funding are rising significantly as of today."
Mr Rammell stressed that the Government would use current legislation to fulfil promises "for example, our commitment to close the funding gap between schools and colleges as resources allow", and to see how "lessons from the dedicated schools grant might be used to inform how funding methodology can be developed".
On the wider issue of local authority control of 14-19 education in FE, the full legislative changes would not come in until the academic year 2010-11. He said: "In the three years until then, the LSC will retain legal responsibility for securing and funding all forms of post-16 education and training outside higher education."
He rejected opposition calls to reform or scrap the LSC sooner rather than later. John Hayes, shadow minister for vocational education, called for it to be abolished, while Sarah Tether, for the Liberal Democrats, said: "I do not feel comfortable passing a Bill now that gives powers to the LSC that will become irrelevant soon.
Mr Rammell replied: "As the LSC will, for the time being, retain that duty for young people, we must ensure it operates effectively."
Colleges welcomed many of Mr Rammell's "reassurances". John Brennan, chief executive of the AoC, told FE Focus: "The statement that the transfer of 16-19 funding to local authorities won't take place until 2010 is significant as it ends two weeks of speculation."