Hackney Community College announced 47 redundancies this week on top of the 98 job cuts it had identified at the end of November.
It needs to reduce its spending by Pounds 1.4 million this year and Pounds 1.5 million next year.
The college has written to trade unions suggesting ways to make savings. These include a shorter working week (a four-day week has been hinted at); a pay freeze; notice for redundancy to be reduced to three months (from 12 in some cases); and termination of all fixed-term contracts of less than two years' duration.
Chrissie Farley, the principal, has written to the Further Education Funding Council warning of the effects of its policies. The college funding levels are 50 per cent higher than the national average, covering a socially deprived area.
Ms Farley told the FEFC: "The impact of convergence (to reach a point where colleges are funded on a similar basis) could be to place the FEFC in breach of its statutory provision to provide sufficient and adequate provision in the capital".
She was aware that the council and some other colleges believed Hackney was over-funded. More needed to be done to reduce costs, she said, "but we have made dramatic progress, reducing our average level of funding by 20 per cent since incorporation".
The college acted within a context of acute deprivation. Its two parliamentary constituencies had the second and third highest unemployment in the country. Hackney had the third highest level of overcrowding. "Unemployment, poverty, debt, illness and past achievement rates directly affect student attendance, retention and achievement," she said.
A spokesman for the National Association of Teachers in Further and Higher Education said: "They have known about convergence for the past three years. Now that policy is biting, they are having a panic reaction. They wasted Pounds 400,000 on subsidising a canteen.
"It is lecturers who bring funding into the college by recruiting, motivating and retaining students. NATFHE members should not have to pay for the financial predicament of the college,"he said.