Ministers have been warned that the further education sector faces "financial meltdown" with scores of colleges in serious difficulty.
A report from the government spending watchdog highlighted a "rapid decline" in the positions of the 244 institutions across England.
The number of colleges running a deficit more than doubled between 2010-11 and 2013-14, from 52 to 110, according to the National Audit Office (NAO).
Some 29 were assessed as "financially inadequate" by the Skills Funding Agency (SFA) - meaning they were at "signficant risk" of failing to meet contractual duties.
That figure could rise to 70 by the end of this year.
The NAO report said in September 2013 colleges were in receipt of £49 million of emergency funding. By last autumn the SFA had converted £40 million of the advances to grants.
However, there was still an outstanding balance of £45 million to 13 colleges as of this February.
The auditors said the Business Department and the SFA had been relying on "unrealistic" financial forecasts produced by institutions - which receive a total of £7 billion a year in public funding.
It also argued that the oversight bodies needed to analyse risks better and intervene earlier to prevent problems gathering pace.
NAO head Amyas Morse said: "The further education college sector is experiencing rapidly declining financial health, and lacks a clear process to inform decisions about local provision.
"The Department for Business, Innovation & Skills and the Skills Funding Agency have taken steps to improve their analysis of risk in the sector, and to intervene more effectively in the colleges in most difficulty.
"But there needs to be more than a college-by-college approach. Until then, the oversight and intervention arrangements cannot be regarded as value for money."
Meg Hillier, chair of the cross-party Public Accounts Committee (PAC), said the report was "deeply alarming".
"I do not believe it is any exaggeration to say the future sustainability of the Further Education sector is at risk of financial meltdown," she said.
"Further education could play an important role in meeting the UK's skills shortage and help kickstart productivity growth in the UK.
"But, at a time when the government has set out its stall to create a high-skilled economy, the financial stability of the FE sector is worryingly uncertain.
"I worry that many colleges are taking tough decisions to avoid financial difficulty, and trying to maintain educational standards, without having the right financial management skills in place.
"Although BIS and the SFA have improved their analysis of risk in the sector, they must support colleges in spotting financial difficulties sooner so that colleges can get back on track before needing formal intervention."
"The independence of FE colleges doesn't mean the Department and the SFA can abdicate their responsibility to get best value for the taxpayer from the public funding to colleges."