Prime Minister Kevin Rudd has given states and territories a clear ultimatum - fund TAFE properly or the Commonwealth will cut their funding and pay it directly to TAFE colleges.
If individual state governments seek to thwart this plan, the commonwealth would progressively direct its funding into a new TAFE Australia network.
Mr Rudd made vocational and educational training (VET) a centrepiece of Labor's campaign launch on Sunday, declaring Australia must nurture the best-educated, best-trained and most skilled workforce in the world.
He said Labor had been building this vision over the last five years, from early childhood to primary and secondary schools and universities.
But so far the reform program had not dealt with TAFE.
Mr Rudd said annual federal funding for VET had increased by 25 per cent since 2007 with investment of more than $19 billion over the last five years.
"Which is why it is worrying to see state governments making TAFE cuts and jacking up fees. We have seen this in Victoria, WA and Queensland where we see TAFEs starting to wither on the vine," he said.
Mr Rudd said he would not stand idly by, handing over commonwealth funds while states cut their own TAFE funding.
He said a re-elected Labor government would require states to maintain and grow, not cut, TAFE funding.
If they aren't doing that by July 1 next year, the federal government would quarantine a portion of its funding to the states and pay that directly to TAFE institutions.
"Under no scenario will we let Liberal states dismantle our national TAFE infrastructure that has taken so long to build - even if it means eventually stepping in and, TAFE by TAFE, directly funding that backbone of our skills system," he said.
Australian Education Union president Angelo Gavrielatos said it was wonderful to see TAFE feature so prominently in a federal election campaign.
"Over 1.2 million people attend TAFEs each year, more than attend university, yet we rarely see the political spotlight shone on vocational education," he said in a statement.
"Requiring the states and territories to maintain their VET funding levels would be a critical first step to turnaround the crisis in TAFE funding."
Opposition education spokesman Christopher Pyne said Mr Rudd just couldn't be trusted to deliver.
In 2007, he promised to build trade training centres in 2650 schools at a cost of $2.5 billion but six years on, only 252 have been delivered at a cost of $1.1 billion, Mr Pyne said.
Similarly, in 2007 Mr Rudd talked tough and promised to take control of the nation's hospitals.
"But this never happened. We have heard this all before," Mr Pyne said in a statement.