The scrapping of the Higher Education Funding Council for Wales (Hefcw) was announced in January.
A white paper has now been published inviting views on the proposed Tertiary Education and Research Commission.
It aims to make sure Wales has "the skills needed to succeed in an increasingly competitive economy".
The new organisation will manage funding for universities, further education colleges, research and skills.
It will also seek to improve links between higher and further education and Welsh business.
Publishing the white paper on Tuesday, Education Secretary Kirsty Williams said the aim was to make it "easier for people to learn and acquire skills throughout their careers".
"Our lives and economy are undergoing huge technological change," she said, adding: "Our national mission does not stop at the school gates.
"We need to ensure that those leaving our schools progress into a post-compulsory system which provides genuine parity of esteem for vocational and academic routes and which equips them with the skills required for sustainable and rewarding careers.
"Such a workforce will allow our economy to be more productive and competitive and our people more prosperous and secure."

Phoenix has launched a mandatory bid for Hornby, after offering to buy a stake from another investor that would gave it a 55% holding in the firm.
The offer, of 32.375p per share, values Hornby - which also owns the Scalextric and Airfix brands - at £27.4m.
Hornby has advised investors to take "no action for the time being".
The toymaker also said it had appointed David Adams as its interim chairman, replacing Roger Canham who resigned from Hornby's board on Wednesday. Mr Canham is also the non-executive chairman of Phoenix Asset Management.
On Wednesday, Hornby had reported falling revenues and deepening annual losses.
The company is struggling to revive its fortunes, which has led to it cut back the number of products it sells.
In the year to 31 March, revenues fell to £47.4m from £55.8m, while underlying losses widened to £6.3m from a £5.7m deficit last year.

The Ireland front row was suspended for two games by European Champions Cup organisers following an incident in the defeat by Toulon in France last Sunday.
Leinster have appealed, arguing that Healy was cited for one offence yet suspended for another.
As the appeal cannot be heard until after Saturday, he is free to play.
The 28-year-old could still miss the Pro12 meeting with Munster at Thomond Park on Sunday, 27 December.
"Leinster believe this is a failure to follow due process and is unfair to Cian Healy," the Irish province said.
Healy was handed the ban for dangerous play after being charged with striking Toulon hooker Guilhem Guirado with his knee during the 24-9 defeat in France.
The striking charge was found to be not proven but the incident was deemed to be foul play.
"As a written decision of the judicial officer is not available, it has not yet been possible to hear the player's appeal nor set a date for the appeal," said organisers European Professional Club Rugby.
"The player is therefore free to play until the outcome of his appeal."

The club's fans have previously booed to express anger at European football's governing body over a number of issues.
Uefa opened disciplinary actions against City in October 2015, but decided against any sanctions.
The new 2017 disciplinary regulations contain no reference to causing a disturbance during competition anthems.
Academic and workplace skills will be "equally valued" under plans to replace the university funding body, the Welsh Government has said.
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Model toymaker Hornby has said a takeover offer from its largest shareholder, Phoenix Asset Management, "significantly undervalues" the firm.
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Leinster prop Cian Healy is available for Saturday's game with Toulon after it was ruled he can play until his appeal against a two-game ban is heard.
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Manchester City will not face punishment from Uefa this season if their fans boo the Champions League anthem after a change to regulations.