Last month, the LSC wrote to schools and colleges, telling that them that budgets had been cut.
The LSC claimed that it was unaware that so many pupils would sign up for courses, so had based funding on incorrect estimates.
But yesterday, at the Association of Teachers and Lecturers conference, members mooted the idea of taking the quango to court.
Robin Bevan, head teacher at Southend High School for Boys, said that the Learning and Skills Council was incompetent and dishonest.
He warned that schools must take action to address the problems caused by the LSC.
"We will seriously consider all the possible ways in which we can secure an acceptable outcome, and that will include, as appropriate, publicity, judicial review or court action in collaboration with other providers," he said.
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