Staff cuts and equipment shortages are eroding the quality of teaching, the chief inspector of colleges warned this week.
And Further Education Funding Council chief inspector Jim Donaldson said quality in further education would continue to suffer unless there was an easing of the cash squeeze on colleges.
He said: "Inspection reports show a positive picture overall, but they show evidence of resource-related difficulties in colleges, particularly with regard to staff."
Capital funding was also hitting quality, he said, with colleges struggling against long-term underinvestment. The teaching of agriculture, art and design and basic education was already suffering.
He warned there was little scope for using tactics such as increasing class sizes to absorb cuts, given the huge variety of courses on offer in colleges. Cuts would instead mean a loss of choice for students.
Mr Donaldson, who will publish his first annual report this autumn, also warned that Private Finance Initiative schemes might not provide the volume of investment needed to bring college equipment and buildings up to standard.
He pointed to concerns about a persistent 8 per cent of substandard lessons in FE, something he said college managers should address.
He was speaking after the FEFC's quality watchdog committee issued its annual report, spelling out an 18-point action plan for ministers, principals and lecturers.
The committee, made up of principals and business leaders under the chairmanship of former British Rail boss Sir Bob Reid, warned there were problems meeting the need for specialist equipment, capital funding and staff morale if teaching standards were to be maintained.
Its report, which highlighted problems with the growth of part-time lecturers, said more needed to be done to improve student attendance and criticised low GCSE and A-level pass rates in some colleges.
FEFC chief executive David Melville said he had decided to publish the report because it had produced an agenda for action.
"At a time when quality is such an important issue, we expect the report to be of use and interest to everyone in the sector," he said.
The report says disruption in colleges has been minimal, given the huge changes staff have faced.
But it warns that "rapid and often radical change has dented staff morale. A prospect of evolutionary improvement, combined with fair rewards and good opportunities for career development are now needed."
And there are warnings over the increasingly casual nature of staffing, using agencies such as Educational Lecturing Services. "This increasingly casualised workforce reduces costs, but such changes in staffing are not always in the best interests of students. Only rarely do these staff engage in curriculum development, student support and guidance activities, extra-curricular activities, formal staff appraisal and in-service training. "The committee is concerned that this development may, if it goes too far, undermine standards. "
There are also concerns that full-time teachers should have appropriate opportunities to stay in touch with technologies and commercial conditions which are changing ever faster.
College equipment also needed improvement: "There is a need to improve specialist equipment and book stocks and to ensure that reductions in guided learning hours do not penalise that group of students who formerly did not attend further education."
Roger Ward, chief executive of the Association of Colleges, said: "The report shows what we have all suspected for a long time: the more you drive down funding, the more quality of delivery is threatened.
"A clear message is that, with better funding, we can continue our drive to improve the skills of the national workforce."