An extra 700,000 students will be offered places at college under the two-year programme announced by David Blunkett, the Secretary of State for Education and Employment.
He announced an extra pounds 725m to pay for the expansion, the biggest increase colleges have been given.
The expansion programme, which covers England alone, dwarfs Tony Blair's pledge to create 500,000 extra places in universities and colleges. Government sources said announcements on expansion in universities would follow.
The plans include bringing an extra 50,000 students aged 16 to 19 into full-time education.
Mr Blunkett also announced more support for sixth-form students. A series of pilot schemes offering teenagers from deprived areas pounds 30 a week to go back to college will be launched next September. A pounds 180m fund will also help students with transport and child-care costs.
But he warned that ministers "will be as tough on failing colleges as we have been on failing schools".
Mr Blunkett 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 many fail to get their qualifications."
He added that there was too much "poor or inadequate teaching" and said in future all lecturers should have a teaching qualification.
Colleges have been heavily criticised for high drop-out rates, with 60 per cent of students failing to complete their course at some centres.
Mr Blunkett's announcement includes a pounds 115m fund to raise standards. Government sources made clear that colleges failing to improve could face closure or merger.
But David Willetts, the Conservative spokesman on education, said the expansion would harm standards. "This is putting the quality of teaching at risk," he said. "pounds 700m for 700,000 students is only pounds 1,000 per student. This is far less than the average cost of educating children."
The 435 further education and sixth-form colleges in England offer courses for more than 4 million teenagers and adults. They are at the heart of the Government's drive to encourage cradle-to-grave education and they provide the vast bulk of the country's vocational training.
Colleges welcomed the announcement, saying it was a great step forward.
David Gibson, chief executive of the Association of Colleges, said: "Sixty per cent of colleges are currently trading at a deficit, following continuing cuts over the last five years. This programme for expansion will help us overcome our financial problems. We want to help many more people achieve their potential and this settlement will help us do that."
Some, however, sounded a note of caution. Colin Flint, principal of Solihull College, said: "There is a lot of good news, but there are some concerns that if we are going from a 500,000 target to a 700,000 target it may mean the money is being spread fairly thin. Of course, most of the students will be part-time and we are very good at dealing with part-time students."Reuse content