The ÖйúAƬ Funding Council for England announced this week that it had received bids from 202 institutions for the 20,000 places being auctioned off to lower-cost providers for 2012-13.

The auction is part of a two-pronged plan to ramp up competition in the sector.

Of these, 167 are further education colleges, which bid for almost 20,000 places, and 34 are universities, which applied for 16,000. A secondary school that offers foundation degrees also submitted a bid.

However, although the proportions mean that further education could be given more than half of the places on offer, college principals have expressed anger at the process.

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Nick Davy, ÖйúAƬ policy manager at the Association of Colleges, said further education providers were being forced to win back places they did not expect to lose after Hefce "backtracked" on plans to protect numbers.

In its original proposals, Hefce suggested that colleges it directly funded - and which were charging tuition fees of less than ?6,000 - would not face the 9 per cent cut in places being applied to universities to create the 20,000-strong pool.

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However, Hefce changed its plans following a recent consultation with the sector - although FE institutions' first 50 ÖйúAƬ places will escape the cull.

Mr Davy said Hefce's decision was "bizarre" as it appeared to run "counter to the direction of travel indicated in the White Paper" about colleges being able to expand.

"Because of this you'll find that probably even more [further education colleges]...are applying for the margin," he said.

Noel Otley, principal of Havering College, said his institution had bid for 60 places, but could lose almost 100 to create the margin, leading to a net loss.

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"You potentially are in a position where you're bidding just to stand still, which is not what we'd thought the process was about," he said.

A number of colleges that have partnerships with ÖйúAƬ institutions are also bidding to replace the student places being withdrawn by universities as they try to limit the damage of the 9 per cent cut to their own core allocation.

Philip Davies, assistant director for ÖйúAƬ at Bournemouth and Poole College, said this meant that "core and margin" policies were having the "opposite effect" to the government's goal of trying to widen participation through further education expansion.

simon.baker@tsleducation.com.