Emphasising that he was speaking personally, Mr Masters told principals:
"You cannot hang about. We should be starting now on bringing together the sectors."
From next year there will be a funding council for the 43 FE colleges whose executive, but not its membership, will be the same as for the SHEFC.
Joan Stringer, principal of Queen Margaret College and a member of the Garrick committee on Scottish higher education, said the committee had rejected a single funding council to protect "the diversity of mission" of widely differing institutions.
Alice Brown, professor of politics at Edinburgh University, who was an FE student at Stevenson College before becoming an undergraduate, pointed out that the links between post-school education and schools should not be forgotten.