The Association of Learning Providers says colleges need a further 100m to continue providing places this year for young people on the e2e scheme, after the LSC froze funding at 238m.
The programme, which currently provides work-based training for 30,500 young people not yet ready for Apprenticeships or employment, benefited 60,000 teenagers in its first year, many referred by Connexions personal advisers. But tight resources are now forcing some colleges to turn young people away from the scheme.
Graham Hoyle, chief executive of the association, said the ongoing number of places could be reduced to fewer than 21,000.
He added: "These are young people who the Government has guaranteed to find a place for. If the money isn't there, somebody will have to find it."
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