Money given to acute trusts to fund medical education must be ringfenced, the British Medical Association has said.
The warning follows publication of figures suggesting the money is being lost to general budgets.
Figures obtained by the BMA under the Freedom of Information Act show that 10 teaching hospital trusts of 33 surveyed could not say how the extra funding they received for training had been spent, and many reported that it was absorbed into the trust's overall budget.
The BMA report Medical Service Increment for Teaching (SIFT) Funding also claims the Department of Health has very little idea of how money intended for medical education is spent.
It says that since 1999 the DoH has not collected information on where the money goes.
The report found that 'there are few limitations placed on training hospitals regarding how they spend the allocated funding'.
BMA medical academic staff committee chair Professor Michael Rees said: 'Medical students represent the future of the health service. It is highly worrying that acute trusts appear to be raiding money intended for medical education in order to get out of financial difficulty.
'The need for decent funding has become even more important in recent years. Numbers of medical students have grown, and numbers of academic staff to teach them have fallen.'