The new money will be spent over the next two years on improving the training of managers and lecturers, modernising equipment and buildings, and widening participation in further education.

Mr Blunkett also unveiled a £183m package of measures to support some of the four million further education students in England over the next two years, including an expansion of hardship funds and help with travel and childcare costs.

David Blunkett: "Colleges play a crucial role in ensuring education and training is available to people"

He said the government now aimed to create 700,000 extra places in the sector before the next election - a dramatic increase in the previous target of 500,000 new places in both further and higher education.

Speaking at the annual conference of the Association for Colleges in Harrogate, Mr Blunkett warned that the extra funding came with a price tag.

"We will be as tough on failing colleges as we have been on failing schools," he said.

"Further education is too important to our economy and society for us to tolerate poor standards or a lack of accountability. Too many students drop out and too may fail to get their qualifications.

David Willetts: "This is putting the quality of teaching at risk"

"We now have a robust system in our schools, where nobody is in any doubt about the need to improve standards. We must develop the same approach in further education, where there is too much poor or inadequate teaching."

The new money announced by Mr Blunkett comes from the extra £19bn allocated to education spending as a result of the government's comprehensive spending review.

The Shadow Education Secretary, David Willetts, said the new funding would see colleges receive just £1,000 for each of the extra 700,000 students being recruited.

"This is far less than the average cost of educating children.

"David Blunkett is rushing into headlong expansion without thinking of what this means for the quality of further education."