Wales's largest government agency is facing a funding shortfall, which could result in the loss of 140 jobs.

Elwa - Education and Learning Wales - has a budget this year of �489m to oversee the important role of post-16 education and training provision.

But the BBC's Week In Week Out programme has discovered that the body needs �3m extra funding from the Welsh Assembly to avoid making job cuts in April.

What is Elwa?

Budget of �500m from Welsh Assembly Government Runs all post-16 education and training Aims for 36,000 more students in education by 2003 Answers to Welsh Assembly

Plaid Cymru is now calling for an independent inquiry into the funding of Elwa.

Peter Harris, from the Public and Commercial Services (PCS) union, said an important meeting of the Elwa works council would take place on Thursday to discuss the jobs situation.

"The 140 jobs is the worst case scenario. These will be on top of the 100-plus jobs which were lost last year."

He added: "Staff are very concerned and worried about the threat of more redundancies and morale has hit rock bottom in recent weeks."

Steve Martin: 'Successful project'

An Elwa spokeswoman said the body was in "advanced discussions" with the assembly about its running costs and staffing.

"Until the detailed discussions with the Welsh Assembly Government have been concluded, it isn't possible to say what the impact on staffing will be," said the spokeswoman.

Elwa has previously been criticised by the Auditor General for Wales for failing to make key checks in awarding contracts, but there has been no suggestion of fraud.

It was alleged that in many cases contracts were awarded without the assembly's approval.

Meanwhile, Week In Week Out has also investigated one of Elwa's flagship projects, the Pop Factory caf� in Rhondda.

The programme established that �4m was given upfront to a privately-run scheme at the centre which has yet to train a single youngster.

But I do stress, we still expect to have a successful project Steve Martin, Elwa

A year ago, the private company behind the scheme, was given the money to start work on transforming an old supermarket into a music and television training centre.

But the site is still derelict and Elwa has now confirmed it wants some of its funding returned.

Elwa, though, says the Pop Factory cafe project is still valid and set to continue, but added that it was behind schedule.

In a statement, Elwa said it had asked the company involved to repay �1.92m, which would be released again when the money was needed.

Elwa says it now hopes the Pop Factory learning centre will be open in early 2004.

Elwa chief executive Steve Martin said: "We have got a very ambitious, exciting project.

"The company has worked with us, they have agreed that they will repay the money, and the money will be used for whatever purposes it needs to be used.

'Mistakes made'

"But I do stress, we still expect to have a successful project."

A Welsh Assembly spokeswoman said Elwa was currently reviewing its support of the Pop Factory training project.

On the issue of additional funding for Elwa, the spokeswoman added: "The audit committee has to consider all the evidence and agree its findings and recommendations.

"Once these findings and recommendations have been finalised and published the Assembly Government will then have a month to respond."

It is claimed financial problems within Elwa have had a knock-on effect on Wales' training companies, which rely on funding from the organisation to train thousands of young people.

They say they are not getting the money needed to continue their work and have hundreds of people on waiting lists, unable to start their training.

In January, Assembly Members were told mistakes were made by Elwa in setting up the National Council for Education and Training for Wales.

Week In Week Out is being shown on BBC 1 Wales on Tuesday at 2235GMT.