Funding doubts are hobbling a programme which has led to good vocational achievements by teenagers, Ofsted says.
It said colleges with "centres of vocational excellence" in England had led to large numbers of young people staying on in education or training.
With specialist equipment, they were providing more high quality courses for those aged 14 to 16 than schools could.
But funding uncertainty was compounded by some schools' reluctance to let pupils do vocational study, it said.
The government is keen to encourage more youngsters, especially the less academic, to stay in education or training.
Ofsted said that in one area the numbers who would have been classed as "not in education, employment or training" (Neets) had fallen when the local college opened a centre for training on motor vehicles.
But high fliers also benefited. Another college was running film and media studies evening courses for gifted and talented pupils.
This gave them access to state-of-the-art facilities and they had been able to take AS-levels early, alongside their GCSEs.
Diplomas
In its small-scale survey of centres in 24 further education colleges, Ofsted found the motivation, attendance and achievement of 14 to 16-year-olds had increased.
Collaboration between schools and colleges will be crucial to the success of the new 14 to 19 Diplomas being taught from next year.
All the colleges involved in the Ofsted study had taken the lead in preparing or backing submissions to run the specialist Diplomas.
But a lack of clarity over future funding was a potential barrier to further development.
"At present, many colleges subsidise their work with schools. Schools which contributed to the funding were also concerned about the sustainability of the work."
There was also concern about the lack of clear funding where several different providers were involved in delivering courses.
"A few of the colleges reported that some schools were denying their more academic learners an equal opportunity to choose a vocational pathway," Ofsted reported.
"There were also concerns about the status of vocational qualifications if many schools continued to channel students who were considered less academically able into vocational programmes."
It recommended that the Learning and Skills Council, local authorities, schools and colleges should review the funding to ensure such programmes were sustainable.
A spokesperson for the new Department of Children, Schools and Families said: "Consultations were held on the 14-16 and 16-19 funding systems earlier this year with the aim of creating an overall funding system for 14-19 year olds.
"Following these consultations we announced changes to the School, Early Years and 14-16 funding systems, which also set out how the new diploma qualifications would be funded."
The national director of skills for employers at the Learning and Skills Council, Jaine Clarke, said: "Schools, colleges and employers will need to continue to work closely together in order to deliver the skills and qualifications that young people will need to achieve good and sustainable employment."
The centres of vocational excellence programme had recently been reviewed and a new standard for working with employers had been released, she said, to which colleges were "responding positively".
"In combination with other developments such as the introduction of 14-19 Diplomas we believe that this will mean that young people in England will be better prepared than ever before for the transition into the workplace or further learning."
It said colleges with "centres of vocational excellence" in England had led to large numbers of young people staying on in education or training.
With specialist equipment, they were providing more high quality courses for those aged 14 to 16 than schools could.
But funding uncertainty was compounded by some schools' reluctance to let pupils do vocational study, it said.
The government is keen to encourage more youngsters, especially the less academic, to stay in education or training.
Ofsted said that in one area the numbers who would have been classed as "not in education, employment or training" (Neets) had fallen when the local college opened a centre for training on motor vehicles.
But high fliers also benefited. Another college was running film and media studies evening courses for gifted and talented pupils.
This gave them access to state-of-the-art facilities and they had been able to take AS-levels early, alongside their GCSEs.
Diplomas
In its small-scale survey of centres in 24 further education colleges, Ofsted found the motivation, attendance and achievement of 14 to 16-year-olds had increased.
Collaboration between schools and colleges will be crucial to the success of the new 14 to 19 Diplomas being taught from next year.
All the colleges involved in the Ofsted study had taken the lead in preparing or backing submissions to run the specialist Diplomas.
But a lack of clarity over future funding was a potential barrier to further development.
"At present, many colleges subsidise their work with schools. Schools which contributed to the funding were also concerned about the sustainability of the work."
There was also concern about the lack of clear funding where several different providers were involved in delivering courses.
"A few of the colleges reported that some schools were denying their more academic learners an equal opportunity to choose a vocational pathway," Ofsted reported.
"There were also concerns about the status of vocational qualifications if many schools continued to channel students who were considered less academically able into vocational programmes."
It recommended that the Learning and Skills Council, local authorities, schools and colleges should review the funding to ensure such programmes were sustainable.
A spokesperson for the new Department of Children, Schools and Families said: "Consultations were held on the 14-16 and 16-19 funding systems earlier this year with the aim of creating an overall funding system for 14-19 year olds.
"Following these consultations we announced changes to the School, Early Years and 14-16 funding systems, which also set out how the new diploma qualifications would be funded."
The national director of skills for employers at the Learning and Skills Council, Jaine Clarke, said: "Schools, colleges and employers will need to continue to work closely together in order to deliver the skills and qualifications that young people will need to achieve good and sustainable employment."
The centres of vocational excellence programme had recently been reviewed and a new standard for working with employers had been released, she said, to which colleges were "responding positively".
"In combination with other developments such as the introduction of 14-19 Diplomas we believe that this will mean that young people in England will be better prepared than ever before for the transition into the workplace or further learning."
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