There will be an “administered college” status which will place restrictions on spending and staff.
Skills minister Matthew Hancock promised “swift and effective action” where colleges were inadequate.
There will also be £77m extra capital funding, plus a further £137m from colleges, to benefit 47 colleges.
Inspectors have found two out of three colleges are outstanding or good – but there are also 4% which are identified as being inadequate.
The Rigour and Responsiveness in Skills strategy sets out plans for a more rapid intervention.
A further education commissioner will advise ministers on how to improve colleges which are inadequate.
This might include the “administered college” status, where the college will have to surrender control of spending and assets.
Struggling colleges could also have their governing bodies replaced or be completely dissolved.
“Where colleges are failing learners we will be knocking on their doors and take swift and effective action.
“It is a dereliction of duty to let failing colleges teach young people. We will not fail in our duty to act,” said Mr Hancock.
“All providers should meet tough standards of rigour and responsiveness. Through these reforms we will be able to intervene without hesitation where they fall short.”
There is also a combined investment of £214m in 47 colleges, funding projects including a construction training centre and “automotive technology hub”.