The FE Efficiency and Innovation Fund, which is in its second phase, will see colleges working in collaboration to find the best ways of sharing functions such as ICT, finance, HR, curriculum and exam and administration, whilst also saving money.

The fund is one initiative that has arisen from a £15 million allocation by Business Secretary Vince Cable.

Skills Minister John Hayes said: "This fund is an important step towards encouraging colleges to share services and to collaborate with other institutions and local organisations to continue to deliver the services vital to the everyday running of colleges, in the most cost-effective way."

The fund was allocated by the government to the Skills Funding Agency (SFA) to support the Association of Colleges (AoC) and the FE sector to deliver shared service solutions.

The AoC works jointly with the SFA on the Joint Collaboration and Shared Services Procurement Board to represent and secure funds for its member colleges so they can improve delivery of their services.

AoC chief executive Martin Doel said: "This is welcome news for our Colleges. We are sure that these projects will provide a valuable contribution to the sector and achieve their aims whilst delivering greater efficiencies.

"The projects will also provide a template for shared service activities in the future so that a wider spread of colleges can benefit and make similar savings."

During the first round of the fund last November, 21 shared services projects won a slice of the £2 million made available.

Round 2 prompted a total of 45 bids, of which 20 have now been allocated a share of a further £2 million funding.

Those successful include Birmingham Metropolitan College, Accrington and Rossendale College and South Essex College.

SFA chief executive Geoff Russell said: "This is great news for the sector and will help to form mutually beneficial partnerships to aid the government's ambition to provide the highest quality skills to support an advanced and competitive economy and lifelong learning."

The 20 successful colleges are:

1. South Essex College

2. Boston College

3. Brockenhurst College

4. Accrington & Rossendale College

5. North Herts College

6. Rotherham College of Arts & Technology

7. Birmingham Metropolitan College

8. City College Norwich

9. Plumpton College

10. Epping Forest College

11. Calderdale College

12. Yeovil College

13. Nescot College

14. East Riding College

15. New College Nottingham

16. Thanet College

17. Harrow College

18. Filton College

19. Worcester College of Technology

20. Moulton College

Mark Astley