The quango responsible for recruiting and training teachers has had its budget slashed by more than pound;200 million.
The Training and Development Agency for Schools (TDA) will have to survive next year on pound;568 million - down from pound;786 million, its previous annual settlement.
Teacher training numbers, bursaries and professional development courses have all been cut and other support services also face cuts.
A TDA spokeswoman said: "As part of recent Government efficiencies, economies have been made across all departments and arm's-length bodies.
"TDA has announced reductions in ITT (initial teacher training) allocation, bursaries and a scale-back in CPD (continuing professional development) funding. Having successfully achieved objectives in the areas of extended services and workforce reform, we no longer need funding for these activities."
In his annual "remit" letter, education secretary Michael Gove said much of the work associated with teacher training and CPD should be outsourced to schools.
The per-trainee funding - another area of the TDA's work - will be frozen for the next 12 months.
"I urge you to be as efficient and cost-effective as possible in all your planning," Mr Gove's letter says.
"While you will need flexibility to manage funding across programmes and to respond to in-year pressures, I expect you to inform us in timely fashion where you find that spend will deviate significantly from what has been agreed."
James Noble Rogers, executive director of the Universities' Council for the Education of Teachers, had expected a 12-15 per cent cut in funding given to universities per pupil.
"We are pleasantly surprised, but Government decisions - such as to stop funding for postgraduate teacher training courses - will have a major impact," he said. "I'm not sure the TDA even know the implications of this new budget themselves yet, but we are relieved the unit of funding, the per-student amount, given to universities has not gone down."
A Department for Education review of teacher training is due to report later this year, and major changes to courses and funding will be made in 2012.
Association of School and College Leaders general secretary Brian Lightman said: "The TDA has had some responsibilities removed, so we would expect to see the budget change. We predict their future role will be more focused on assessing the suitability of potential teachers and helping them get on to training courses."
The TDA will become part of the DfE, as an executive agency, in April 2012.