A Midland college boss has quit her job in protest after a nearby school was granted permission for a sixth-form.
Colleen Chater, principal of Solihull Sixth Form College, claimed the Government policy that allowed the development at Arden School was "deeply flawed".
She claimed it would force her college into competing for students with Arden at a time when schools and further education centres were supposed to be working collaboratively.
Solihull Metropolitan Borough Council gave permission for a sixth form at Arden because Government policy supports well-performing schools wishing to expand. But Ms Chater said the move would mean her college facing a £1 million funding deficit due to lost students, threatening the viability of minority courses.
"A competitor is setting up three miles down the road and we have done our sums and it will depend how many pupils stay at Arden, but the number of students we are likely to receive will drop.
"That means we will have to lose up to £1 million out of the budget."
Ms Chater said she was resigning to make a stand against a policy which she believes undermines colleges across the country.
"I am in this job to ensure that every young person who comes to this college has the highest standard of teaching, the best possible chance of success.
"If you take away £1 million from my budget because of a Government policy then what I am trying to achieve is compromised."
Local authorities are under pressure to make a "presumption" in favour of successful schools wanting to develop provision for 16- to 19-year-olds.
The policy is designed to allow such centres to pass on their expertise to more pupils. However, Ms Chater warned it pitches colleges and schools in a fight against each other for students.
"What this Government policy has done is to create a major issue between a high-achieving school and a high-achieving college.
"I think the policy is deeply flawed and it is on a matter of principle I have resigned."
Ms Chater, who has been a principal at the school in Widney Manor Road since 2003, said there was a "contradiction" in the Government's policy.
"The Government is expecting schools and colleges to collaborate on the new vocational diplomas that are being introduced, which is absolutely right.
"But when you start to introduce a competitive strategy in the middle of that, you have to start thinking about the implication on the collaborative agenda.
"You can't have both. There is a contradiction and a real tension between expecting institutions to work collaboratively on the new diplomas and personalised learning which I have a problem with."
Ms Chater said the college was being forced to re-think how it delivers learning to students. More expensive and less popular courses such as ences and modern languages could get sidelined, she warned.
Last week Ms Chater warned the college's ability to continue with minority courses such as Italian, Russian and Latin was under threat if Arden gets its sixth form.
"The reason I have resigned is because I want to make a principled stand about this. I want to say it is wrong," she added.
Ms Chater said she would not be leaving until a replacement had been found.