a pilot project where college staff review the work of neighbouring institutions has shown they can contribute more than highly paid consultants.
The Quality Improvement Agency is recommending that all colleges have a system where staff help to improve other institutions after observing the impact this has had on eight groups of colleges over the last two years.
Peer review could form the basis of self-regulation and reduce the burden of external scrutiny, the body responsible for raising the quality of further education believes.
Colleges say it is also a powerful way of improving their performance and found concerns that visits from colleagues would just replicate the pressure of outside inspectors were unfounded.
The eight partnerships, involving 78 colleges, varied from small local groupings to national collectives. Both were found to work well, although local groups had to be aware of the pressures of competition and national ones could have logistical problems.
Each partnership devised its own way of learning from each other's work. In several, a group of about 10 managers, lecturers or support staff led by someone at vice-principal level would investigate a specific area of work for two days before producing a report.
In return, the institution being reviewed will contribute members of staff to teams examining the others in a partnership.
Keith Dennis, vice-principal of Castle College Nottingham and chair of the pilot project's steering committee, said consultants could still be useful but his college's cost-benefit analysis of peer review had shown it to be more effective.
He said: "We compared it on cost, quality and impact. Our experience is that peer review is delivering better outcomes. We have so much understanding at a practitioner level in this sector, as good as any external consultant could deliver."
The reviews have influenced everything from changes to the structure of management teams in the partnership's colleges to the quality of provision, although Mr Dennis said the final proof of the latter will arrive when success rates are published later in the year.
Giving staff time off to make their visits comes at a cost, however, and in the East Midlands, each college received pound;15,000 from the Learning and Skills Council for the two-year pilot. The same amount would buy the same 30 days of work from consultants for only one year at a typical pound;500-a-day rate.
Colleges said peer review did not create the same pressures as inspection, although staff have criticised internal lesson observations, saying they can be worse than Ofsted.
Adam Suddaby, director of quality at Leicester College, said: "They're not being graded and it's all about improvement."
The QIA intends to involve a further 100 institutions from September, bringing the total number up to almost half of all colleges.