A third of the cash is in recognition of a bigger-than-expected number of students on basic skills courses, seen as a priority by the Learning and Skills Council and a lucrative source of cash.

Colleges have recruited around 10,000 students more than they anticipated into basic skills - which accounts for around a third of the money being distributed around the country.

Geoff Daniels, assistant director for funding policy and development at the LSC, said: “Planning in a big college is not an exact science. The final audits have been completed for the year 200102 and we have provided extra funding for those who have over-achieved against targets for that year.”

The LSC sees the hand-out as a stop-gap but will be looking at how colleges can be better-rewarded for their contribution towards national targets, particularly on enrolling more students from hard-to-reach groups.

The approach taken by the Further Education Funding Council, which was replaced by the LSC, was considered too complex. This area is being looked at as part of the review of the funding methodology the LSC inherited.

John Harwood, chief executive of the LSC, said: “Across the country, colleges are running courses for young people and adults which are contributing to the challenge of re-skilling the nation.

“It is right that extra funding is provided to those institutions which are working towards this shared objective. I am delighted that adult basic skills has been a strong growth area and contributed towards our progress against this target.”

Bournemouth and Poole College has been given pound;1m from the fund. It says it did not expect the money and will be able to use it to expand its activities.

Richard Dimbleby, the principal, said: “We are very pleased to receive this funding for the work we have done beyond our targets. We were not expecting this payment, which reflects our commitment to widening participation.

“The money will enable us to invest in staff and resources.”