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Some further education (FE) providers in Wales are putting students on "wrong" courses to attract more funding, education watchdog Estyn says.

It blamed the problem on instances of too many sixth forms and colleges competing for students.

The watchdog said this "doesn't always work in the right interest" of students who become disaffected and drop out.

A Welsh government spokesperson said it was reviewing the post-16 planning and funding system.

Huw Collins, an Estyn post-16 inspector, said of colleges: "The more learners they get on their courses, the more funding they'll attract.

"So sometimes they will put learners onto the wrong level of course, or the wrong type of course for them.

"Young people, particularly 14 to 19 year olds, don't always get the best provision that's most suitable for them at the right level.

"So there is competition there for providers to actually attract funding by getting as many young people onto their courses. And that's not always in the best interest of learners."

He said there were many examples of students being placed on a course which was not suitable for them, and having to drop out as a result.

According to Estyn, around one in five students who enrol at further education colleges fail to complete and pass the course. A similar figure for schools or work-based providers is not available.

Mr Collins said: "Learners will start on a particular course and then a few months later they find that's not the right course for them, it's not the right level for them, it wasn't what they were expecting and then they drop out and become disaffected with training and learning."

But John Graystone, chief executive of Colegau Cymru, the body that represents further education providers, said the situation had improved over the last decade.

He said: "You talk about a figure of 80% [completing] now - it was about 50% 10 years ago. So we've made huge strides.

"And as you get into that 80%-plus figure, it's a bit like a high jump. The higher you go, the higher the bar goes and the more challenging it becomes."

Since 2008, the Welsh government has pushed for post-16 education providers to work together more closely by launching a "transformation agenda".

Coleg Sir Gar, a further education college in Carmarthenshire, works closely with local schools to offer a wider range of courses.

Principal Barry Liles, said: "We've always identified the fact that personal or institutional ambitions or aspirations have got to be cast aside.

"We have to be true to our word and put the learners as the focus of our work and provide the best opportunity.

"And it is truly in partnership. It's not us or them, we've got excellent examples here working with local schools."