The Further Education Funding Council is looking into complaints by parents of pupils at Springfield School, a special school in Witney, Oxfordshire. Current and former parents mounted a campaign for their children to be educated locally alongside others without learning difficulties or disabilities.
They say their only option currently is for profoundly disabled students studying post-16 to travel 20 miles to attend courses at Oxford College of Further Education.
The inquiry, headed by Andrew Collier, former chief education officer for Lancashire, could prove a national test case for the rights of parents to demand properly-funded integrated education post-16.
The FEFC has a legal duty to ensure that all reasonable needs for FE are met.
West Oxfordshire College ran a pilot course for students with severe disabilities. But it dropped plans to make the course permanent because demand was poor. Parents say the course was unpopular because the college failed to integrate severely-disabled students with others.
No neighbouring school with a sixth form has staff or equipment to meet the students' special needs.
Now the FEFC must decide if there is enough demand to fund the provision. Andrew Collier will interview parents and college heads about whether there should be more courses for profoundly disabled students closer to home.
Cheryl Dove, chair of governors at Springfield School, has a 14-year-old daughter with severe learning difficulties. "Many of the children at Springfield don't have the health to go on a 40-minute journey twice a day, but if they are over 16 the only other choice is to keep them at home," she says.
Appeals to the local authority for a sixth form at Springfield have been rejected in the past three years. Another LEA review is planned.
Parents are fighting for children to continue at Springfield after 16. But each parent must apply for permission from Education and Employment Secretary Gillian Shephard.
Alan Stuart, principal at West Oxfordshire College, says there has not been enough demand to offer a course for the profoundly disabled.
"We offered a pilot course in 1994 and we believed that demand would build up so that we could offer a permanent course, in effect the reverse happened, " he says.