Vocational training is to be free up to the age of 25 under plans announced by the government in an attempt to bridge England's skills shortage.
England has a chronic skills shortage
The further education White Paper also reveals plans to attract high-fliers into working in further education and halt funding for failing colleges.
Education Secretary Ruth Kelly said boosting skills was one of the biggest challenges facing the country.
But the Association of Colleges said the plans did not go far enough.
Its chief executive, John Brennan, said employers should be made to double the amount invested on training.
He said: "What the nation needs is an urgent transformation of the existing skills stock, and this package of measures will not achieve that.
"Government should be much bolder in requiring employers to take their responsibilities seriously, and much more helpful to individuals."
The proposals include free education up to A-level standard to be offered to those aged 19 to 25 from 2007. This part of the announcement was included in the chancellor's Budget speech last week.
Ms Kelly hopes the plans will bridge a "major chasm" between training and jobs.
The plans have received a mixed response from teaching organisations.
The Association of Teachers and Lecturers described it as a "missed opportunity".
Its general secretary, Mary Bousted, said the ATL welcomed the emphasis on developing the workforce.
But she added: "However, an opportunity has been missed to state how and when the disparity with comparable funding in schools will be reduced to prevent college staff and older students paying for reforms.
"Without sufficient funding, the emphasis on skills means that students with disabilities and special needs will be excluded."
The Association of School and College Leaders broadly welcomed the White Paper, but objected to placing additional pressure on underperforming colleges.
This was echoed by Natfhe, the university and college lecturers' union.
A plan to make colleges in England more business-focused was outlined last summer by the organisation which funds the further education sector, the Learning and Skills Council.
But two government-commissioned reports published towards the end of the year set out the scale of the problem.
Sir Andrew Foster's report on further education said the nation's competitiveness required a "crystal clear" focus on skills.
Colleges should have less regulation and clearer government support, he said.
Meanwhile, in a review of the nation's skills needs up to 2020, Lord Leitch concluded that the UK lagged behind competitors, and ranked 24th out of 29 developed nations.
At the same time, India and China are rapidly improving their skills base.
Launching the White Paper, Ms Kelly said that training was vital.
She said: "For a modern, competitive and just economy, our aspirations should be for all young people to be to be in education and training, for all adults to be able to continue gaining new and valuable skills, and for all employers to see training as an essential investment in their workforce."
Ms Kelly highlighted the UK's poor international record on getting youngsters to stay in education and training beyond the school leaving age.
She also said that weak provision needed replacing, with new organisations being brought in to expand supply where necessary.
In future, further education colleges will have to be focused on the needs of employers. Colleges that develop good business links will be rewarded - those that do not will lose funding.
Ministers hope to plug the skills gap
Employers will be encouraged to be involved in the design of courses to ensure that colleges are equipping students with the skills they need.
An £11m programme will encourage the recruitment and development of a high-flying further education workforce.
The Learning and Skills Council said the White Paper was a major step forward, but attitudes to vocational training remained a "national disgrace".
The CBI said most businesses were dissatisfied with courses provided by state-run colleges, and welcomed government plans to allow private trainers to compete for public money.
Its director-general, Sir Digby Jones, said: "Ensuring colleges focus on the needs of employers will help banish the identity crisis about their role they suffered for too long - and the introduction of limited competition to the sector is a positive step towards delivering the flexible, high quality training that has too often been lacking."
Shadow Secretary of State for Education and Skills, David Willetts, said the Conservatives welcomed the "agenda of choice and diversity" but said FE colleges needed less central interference.
He added: "And the Government is pushing the focus of colleges on to the under 25s who will get for free courses that over 25s are expected to pay for. But the big challenge is to help older people stay in the work force."
The Liberal Democrat's Shadow Education Secretary, Sarah Teather said the document was full of aspirations but short on detail. She said funding for colleges was still too complicated and bureaucracy was holding them back.