One in 10 teaching staff at a Leeds college faces redundancy as it tries to meet a pound;2 million shortfall.
Park Lane college says that the Learning and Skills Council is to claw back funding because of poor results on basic skills courses which have suffered from students dropping out .
It is expected that 70 jobs will go, although the college hopes this can be achieved through voluntary redundancy and non-replacement of departing staff.
The LSC is to scrap retrospective claw-back from next September. The practice has caused severe budget shortfalls for some colleges - often because student recruitment and retention have fallen short of what was predicted when funding was decided.
Clive Joels, vice-principal of Park Lane, says his is one of a number of colleges particularly prone to problems because of difficulties of keeping basic skills students until they are qualified.
He said: "Our reduced funding allocation for 2003-4 means that we are unable to support our current staffing levels.
We have had to take this action to ensure the future prosperity of the college."
Members of Natfhe, the lecturers' union, and Unison, which represents support staff, were due to meet this week to discuss how to respond to the redundancies.