Powys council's cabinet said the loss of £1.6m over the next three years has affected the number of classes it could afford and it was launching a review.
It will look at whether its sixth forms are financially viable and educationally sustainable.
The Welsh government said it is working with Powys to minimise the impact of cuts to learning.
The council launched a similar review three years ago but eventually decided not to shut any sixth forms in the county.
Since then, the council has backed the takeover of the struggling John Beddoes School in Presteigne by Newtown High School, meaning the number of sixth forms in the county will drop from 13 to 12 from April.
Council cabinet member for learning Myfanwy Alexander said: "Changes to the way post-16 funding is delivered and a decline in pupil numbers have had a severe impact on Powys sixth forms.
"Learner choice will be hit hard and the sustainability of Powys sixth forms will be seriously affected."
In September 2012, the council was able to fund 232 further education classes across the authority area.
But according to the council, the decline in pupil numbers and changes to post-16 education budgets means only 181 classes will be funded in September 2014.
Ms Alexander said she feared a "reduced menu of subjects" for pupils, leading to some students travelling outside of Powys to study.
She said the education authority had made "strong representations" to the Welsh government on the funding changes, and had asked for a rethink on funding levels or risk "damaging changes in Powys".
Responding to the council's comments, the Welsh government's deputy minister for skills and technology Ken Skates said: "We have been open about the stark reality of the financial challenges ahead and the difficult decisions that we are facing.
"The post-16 sector remains a key priority for this government and we are working closely with colleagues in Powys and across Wales to minimise the impact of any reductions on learning."
Controversial plans to save around £20m was approved by councillors in Powys last week. The decision also means about 400 posts will be lost at the authority.
Some secondary school sixth forms in Powys could be at risk following a 10% cut in post-16 education funding.