Officials have delayed the announcement of 16-19 funding allocations for next year after a surge in demand for places left them with a shortfall of about pound;65 million.
Student enrolments had not been expected to rise at all next year, with the Government budgeting for static numbers. But various factors, including the recession making the job market unappealing, have led to demand for an extra 13,000 places.
Colleges will absorb most of the unexpected growth, with 10,000 more students than predicted. A further 3,000 places are needed in school sixth forms, where numbers had been expected to decline.
The delay is embarrassing for the Government and the Learning and Skills Council, after pledging to announce funding allocations early, and with colleges still angry at the suspension of capital funding.
While the shortfall is only around 1 per cent of the total student numbers, David Collins, president of the Association of Colleges and principal of South Cheshire College, said his local LSC officials had indicated they would be unlikely to find money for all the extra students.
"It would be very disappointing if this growth was not properly funded," he said.
"It looks like colleges will be carrying even more unfunded students than they have done this year, or that there will be colleges which, because of difficulties with accommodation and staffing, will not be able to meet this demand. I would not be surprised if there were significant numbers of students who were not able to follow their programme of choice in college."
Many colleges already have higher than expected enrolments this year, Dr Collins said. Normally, they would be compensated by a greater allocation in the following year, but now the funding shortfall makes this unlikely.
Dr Collins said: "This makes life difficult for colleges in their forward planning process. It's a reflection of difficulties that the LSC has had in a number of departments, but that's not helpful to colleges.
"You have the fact that more people are choosing to stay on in colleges, and the fact of the recession, and it would seem highly predictable that numbers of 16s to 18s in education would be growing."
The FE shortfall of about pound;65m is remarkably close to the pound;68m that was transferred out of the further education budget and into university student grants last year because of an unexpected rise in numbers in higher education.
Asked for comment on the funding shortfall, the LSC said only that providers had been informed of the delay in the allocations.
It told them: "The notification of final allocations for 16-18 was due to be with you on 13 March. Discussions continue with the Department for Children, Schools and Families, so we will not be able to meet that deadline. We will continue to work with the DCSF to agree the way forward and will communicate further as soon as we are able."