The decision to cut the number of hours an unemployed student can study from 21 to 16 has been given a cautious welcome by the Further Education Funding Council. It said that 16 guided learning hours are broadly equivalent to the 21 hours of supervised study which applied previously.

The council added that the change will probably be "cost-neutral" and will align the benefits system to the way courses are now delivered. "It clarifies the position for all students and will bring consistency to the decisions of local benefit offices."

Ruth Gee, chief executive of the Association for Colleges, said: "Today's announcement appears to be a tidying-up arrangement. But we need to be convinced the Government will apply these new criteria uniformly. Otherwise it is a reduction, and students will suffer more not less."

The AFC estimates that 100,000 students, nearly all in further education, are now studying under the 21-hour rule. It will monitor the situation to see whether students are forced to drop out. It is critical of the fact that students are still expected to drop their studies at 24 hours' notice and take up a job.

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Making the announcement earlier this week, Ann Widdecombe, employment minister, used Jobseekers' Allowance legislation to bring study rules in line with the new definition of full-time and part-time study used by the funding council.

"Our aim is to allow as many unemployed people to study while looking for work as do at present, and to remove the anomalies that have crept into the current rules," she said. New regulations will be introduced when the legislation is published next year.

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Stephen Byers, Labour MP for Wallsend, said: "Labour will be tabling a new clause to the Jobseekers Bill in its committee stage in order to have a proper debate on this issue."

The National Union of Students lobbied Parliament this week as part of a National Day of Action for Further Education. Jim Murphy, NUS president, said: "The regulations needed to be clarified, but cutting the number of hours claimants can study for will simply reduce their opportunities for self-improvement."