Ministers and funding chiefs have warned colleges and universities to halt the hostile competition they say is hitting efforts to expand the further education sector.
They are concerned at poaching and other practices they say some institutions use to boost student numbers - and the accompanying cash - without creating new opportunities.
Many colleges have reported a sharp drop in numbers because of what Sir William Stubbs, chairman of the Further Education Funding Council, calls "predatory trading".
Speaking at the Association for Colleges' annual conference in Glasgow last week, Sir William condemned "corporate actions which are legal but unacceptable".
He warned colleges against practices which include abuse of franchising - where students are shared between organisations - to double cash from funding agencies.
Tim Boswell, education junior minister, has also condemned practices which damage wider recruitment. He warned of serious consequences when addressing a meeting of sixth-form college principals. "Those who practise ruthless and over-aggressive competition often fall victims to it themselves," he said.
Some colleges have lost up to 20 per cent of students soon after enrolment, or even in mid-course, because of universities' predatory trading, according to Dick Evans, principal of Stockport College. "Malpractice is not restricted to the FE sector. Colleges are tearing themselves apart for the same students, " he said.
Mr Evans estimates some colleges are making up to Pounds 500,000 by poaching students.
At Blackpool and the Fylde College, Lancashire, deputy principal David Robinson said: "A number of students on certain courses had accepted offers in September and then decided to go to university."
At the AFC conference Sir William stressed, however, that his criticisms were pre-emptive warnings to "mythical institutions".