Further Education Funding Council lawyers admit the current law is a mess and expect a growing number of cases following a ruling which left a severely mentally and physically-handicapped man with no school or college place.
Robert Parkinson, 20, who has profound and multiple learning difficulties, left Bramshaw special school, Bradford, after his statement of special educational needs expired. The local authority wanted the FEFC to help pay for Robert to attend a specialist college - but the FEFC refused saying that there was not sufficient evidence that the proposed course would lead to a literacy or numeracy qualification.
Stephen Hocking, an FEFC education law expert, said the FEFC was surprised the judge had ruled that neither the FEFC nor Bradford was responsible.
"Nobody can be happy with the ruling," said Mr Hocking. "We were quite sure somebody would take responsibility but the FEFC felt that it should not be them. People are falling through the gaps, and that's something nobody can be proud about."
Mr Hocking is co-author of an FEFC guide to the law for FE students with learning difficulties and disabilities published to coincide with the Tomlinson committee findings.
Professor John Tomlinson's report called for a more flexible approach so students with learning difficulties would receive funding for maintaining existing skills and gaining new ones.
FEFC director of education programmes Geoff Hall hinted that the FEFC was sympathetic to Professor Tomlinson, but added that the council was constrained by the law.
"We will look carefully at John's arguments as to whether we can be more liberal in our interpretation of progression," said Mr Hall.
Stephen Hocking expected there to be more cases brought by the parents of students with learning difficulties at the crucial ages of 16 and 19 where parents can choose between a statemented student staying on in school going to an FE college or leaving education.
"The local authority may want to cease the statement and pass the student on, which is broadly the policy of the Further and Higher Education Act," he told the conference. "A local authority school provides continuity, but the FE sector is seen as a stepping stone towards adulthood and may offer better opportunities."
Last year the FEFC paid for 2,000 students whose needs were not being met in mainstream colleges to attend special colleges. More than 80 per cent of the 1,583 students seeking specialist college places this year had their cases approved. While local authorities have a legal duty to educate children with special needs, the FEFC is not obliged to seek out students with learning difficulties.
Professor Tomlinson said that some students who might be considered to be "treading water" at specialist colleges were having fees paid for by the FEFC. But current legislation appeared to rule out support for maintaining existing skills.
He called for better planning between schools and FE and the switching of home-to-college transport cash, held by local authorities, to the FEFC. "It's silly to leave gateway activities, such as help with transport, with other agencies."
Adrian Shaw, manager of the Department for Education and Employment's FE division, told the conference that a circular to be published next year would outline the services available to students with disabilities.
But Julian Gizzi, head of the FEFC's solicitors Beachcroft Stanleys, said: "Much of law relating to these students is in a sorry state and serves no one well."