The Vocational Training Council is to introduce performance targets in an effort to guarantee funding after it was criticised by auditors for poor management.
Executive director Professor Lee Ngok said it also would link up with the Employees Retraining Board to boost training for low-skilled workers and middle managers in preparation for China's entry to the World Trade Organisation.
The council was criticised by the Audit Commission in November for financial mismanagement which led to at least $160 million in lost revenue.
It has since introduced improvements, including defining the relationship between itself and the Government with performance indicators, which will come into effect from April.
The indicators, which include students' pass and placement rates, will be shown as evidence when the council seeks Legco's approval for its annual application for funding.
'At the end of the financial year they will check whether we have achieved our performance targets set out in the memorandum and decide whether to reduce the funding,' Professor Lee said.