The top 15 per cent of colleges will be given wide-ranging freedoms with their budgets for adult learning under the new Skills Funding Agency (SFA).
Outstanding providers will receive a single budget from the funding body from September next year and will be free to make their own decisions on the number of students and the type and level of courses offered.
As well as coming under less audit scrutiny and having fewer inspections, they will be encouraged to develop their own qualifications and will be free to determine their own level of borrowing.
Other providers will be able to switch funding between Train to Gain and apprenticeships as required - but they will not be able to transfer cash between their funds for employer training and individual adult education. And those that are identified as failing will not be allowed any extra freedoms under the new regime.
Susan Pember, director of SFA transition at the department for Business, Innovation and Skills (BIS), said: "Nobody else is going to sign off your plans, that's the autonomy. But if you're an outstanding college, I would expect you would want to reflect your regional needs within your plan."
BIS calls the new freedoms "earned autonomy" and expects in return that colleges and other providers will follow national priorities, provide information on quality and success rates to employers and students, and use the new flexibility to respond to local need.
Colleges and providers are also promised that dealing with the SFA will be simpler, with a single point of contact covering funding allocations, performance, intervention and any capital projects.
But the department said it was avoiding the risk of a high-profile public sector IT failure by retaining its old systems, which will be gradually phased out and replaced by a new integrated system over time.
Lynne Sedgmore, chief executive of the 157 Group of leading colleges, said: "157 strongly welcomes the new freedoms and is keen to evidence that increased trust and flexibilities will enable colleges to give a more responsive and effective service to employers and learners.
"We have been arguing for such freedoms for many years and are pleased to see them offered at last."
Martin Doel, chief executive of the Association of Colleges (AoC), said: "AoC welcomes the fact that the freedoms promised in the Skills for Growth strategy are potentially available to all colleges and not to just 15 per cent of them.
"We understand that a 15 per cent limit may apply in 201011 for practical reasons but we do not accept this as a permanent restriction on college self-determination.
"We are sure that colleges will make best use of whatever flexibility is offered to them.
"Given the challenges set out in the skills strategy and the pressures created by the recession and public spending restraint, colleges will need more freedom to respond in a way that serves the needs of their local communities."