The controversial tuition fees system for undergraduates could be scrapped, Prime Minister Tony Blair has indicated.
The Government must find a "better way" to combine state funding and student contributions, he told the Labour Party conference in Brighton yesterday.
It follows Mr Blair's recognition of public concern over the abolition of grants last month when he indicated he was prepared to look again at supporting students from poor families.
"It is an issue that came up a lot in the election campaign and we have to make sure we've got the right way forward for the future," said Mr Blair.
The shakeup could include ending tuition fees which have faced bitter opposition since their introduction three years ago.
Critics say they deter students from poor backgrounds who are more concerned about getting into debt.
Possible replacements to the system include a graduate tax or repayment system in which students pay nothing until they start work.
In Scotland, tuition fees have been replaced by a system of paying back fees and loans once students have graduated.
Liberal Democrat higher education spokesman David Rendel called for the scrapping of tuition fees and restoration of grants for students across the UK at his party's conference at Bournemouth last week.
He said the fees acted as an "active disincentive" for young people.
Fees came in at £1,000 a year, and have now increased with inflation to £1,050. Average debt for graduates has risen from £6,500 last year to £10,000 in 2001.
The Government has previously argued that fees are the only way to fund thousands more college places, widening access to higher education.
It said that those who benefit from higher education should contribute towards the cost.
But higher education minister Margaret Hodge has admitted that the array of grants and bursaries for poor students was an "absolute nightmare" that needed clearing up.
A National Union of Students spokeswoman said: "We are very happy that Tony Blair has finally committed 100% to a review of the student funding system."
"By doing so the Government has admitted it has made a big mistake with the current system."Reuse content