A Government announcement on the size of the funding expansion is expected in November when 30 deprived areas will also be chosen to pilot education maintenance allowances of up to £40 a week for students over 16.
Mr Blunkett told the Labour party conference in Blackpool: "Years two and three of the comprehensive spending review (CSR) will be at least as good as year one." And he implied that the additional money would be well worth waiting for.
Further education colleges gained the lion's share of new post-16 spending following the CSR in July, with an increase of £255 million - an extra 8.2 per cent. An additional Pounds 100m was given for the New Deal, in which colleges are heavily involved. Universities gained £280m - a budget increase of 5.7 per cent.
But Mr Blunkett is concerned about the failure of school-leavers and adults from deprived areas to take up further education options. Lack of student financial support is identified as a key factor. The Government also recognises that college support systems to retain previously non-participating students are more costly.
A series of top-level meetings and announcements is due in the autumn, in line with a Government pledge to boost FE.
Baroness Blackstone, the further and higher education minister, will meet leaders of the training and enterprise councils, Further Education Funding Council and Local Government Association later this month to discuss the setting-up of a post-16 forum to co-ordinate the education and training of all 16 to 19-year-olds.
A partnership approach to student support is also planned for the piloting of allowances in deprived areas and for the wider proposals to replace local education authority discretionary awards.
Consultations on alternatives to discretionary awards ended this week and a report on the findings of a committee headed by Local Government Association education chairman Graham Lane went to the Government this week.
At a conference on the Lane report, organised by the Association of Colleges in London last week, Lady Blackstone said: "An education maintenance allowance will be payable to 16 to 18-year-olds from low-income households, to help more of these young people to stay on and achieve in learning. Subject to the outcome of these pilots, the EMA could eventually replace post-16 child benefit."
Means-tested allowances would be available in selected areas from September 1999 where participation in FE was low, she said. Research for the Government by the Policy Studies Institute shows that while the average annual expenditure of an FE student was £6,000 , the average income was £5,000 - a shortfall of £1,000.
However, adults outnumber young people in FE by two to one. The Lane report proposes a more radical overhaul and redistribution of £1.2 billion currently spent on child benefit and discretionary awards. Local partnerships would be asked to balance "entitlements and flexibility" to provide age and poverty-related allowances of £300 to £1,250.
Mr Lane said: "At the moment it's all flexibility and no entitlement, which means that many people finish up getting nothing."