Government officials wanted to axe all further education colleges in England and Wales to save money, Vince Cable has claimed.
The business secretary said he blocked the move in 2010 - despite being told by civil servants in his department that "nobody will really notice".
He was speaking at a fringe meeting at the Lib Dem conference in Glasgow.
He suggested the money saved could have been used to keep his party's pledge to axe student tuition fees.
"We took a big political hit for that decision," said Mr Cable, but he said it was worth it to protect "post-school" training, which he said would get a further boost with plans for more apprenticeships.
"I have a so-called unprotected department. We were going to have our budget cut by 25%. The biggest items were universities and students, and FE.
"And I could have taken the advice we had from the civil servants, who said 'well, why don't you just effectively kill off FE. Nobody will really notice."
He added: "The easy way out would have been to have taken all the money out of the FE sector and out of training and I said 'we are not doing that'.
"It is absolutely critical for the future skills base of the country that we have strong post-school training and education.
"So although the FE sector has been cut - I won't pretend they have had an easy life - we have , to a significant extent, protected them."
The coalition cut the overall teaching budget for higher education, excluding research funding, by £2.9bn or 40%, over four years.
Within that, the further education teaching budget was cut by £1.1bn, or 25%.
The coalition increased the maximum universities could charge for tuition from £3,375 to £9,000 a year to compensate for the cuts in teaching budgets.
The Lib Dems - who promised to axe tuition fees before the 2010 general election - saw their opinion poll ratings plummet following the decision and the party has yet to recover.