Next year's university applications could be thrown into chaos after the minister in charge suggested students could get a cut-price degree at the last minute.
The Universities minister, David Willetts, said in an interview with The Independent that universities would be allowed to slash fees or offer other incentives only weeks before lectures begin, to fill courses during the clearing process.
It raises the prospect of students holding off from accepting places and a mad scramble for the cheapest courses, as universities lower fees to attract students.
It also puts Mr Willetts firmly at odds with the Office for Fair Access (Offa) – the body in charge of regulating university fees – which has written to universities asking them not to reduce their fees in clearing because it might encourage applicants to apply late in the hope of minimising the debt they take on – reducing their chances of being admitted at all.
The access watchdog believes "such risks are more likely to be taken by applicants from disadvantaged backgrounds". Offa admits it has no powers to stop universities charging variable fees.
In the interview, Mr Willetts said that universities planning to charge the maximum £9,000 a year to students might find themselves having to lower their fees at clearing to fill their places.
"We will have to see how it plays out," Mr Willetts said. "When they go into clearing, some universities may have to offer lower fees."
Aaron Porter, president of the National Union of Students, said clearing would be turned into a "flea market" exposing students and their families to "unnecessary panic and grotesque unfairness".
The Government has been stung by the fact that two-thirds of universities plan to charge the £9,000 maximum fee from September 2012.
Mr Willetts's latest suggestion raises the prospect that students on the same course could end up paying different fees – regardless of their financial background. Government sources said they would introduce legislation to ensure this did not happen.
Groups representing Britain's universities said they fully expected institutions to take advantage of the flexibility and alter their prices at the last minute to increase demand.
Pam Tatlow, chief executive of Million+, the body which represents many former polytechnics, said she expected price would be a motivating factor.
"Universities have been placed into a market by the Government and you can expect to see them using a number of levers, including price, to ensure that demand is maintained," she said.
Ms Tatlow was also concerned clearing could become chaotic as students shopped around for the cheapest deals.
Mr Porter added: "This ill-thought-out proposal is the latest ingredient in the recipe for the inexcusable and unmitigated chaos that the Government's fees policy has become.
"Efforts to force an unworkable market on higher education are already backfiring, even before the first cohort of students have entered the dangerously unstable funding system that the Government has prepared for them."
In the interview, Mr Willetts also suggested that some universities might offer non-cash incentives. Academics acknowledged they might have to "bribe" would-be students with offers of free iPads and laptops.
A shortfall in numbers could lead to universities reducing their charges for students starting in September 2013.
But offering incentives would be easier, university sources said, to avoid the prospect of students on the same course paying different prices.
Mr Willetts indicated Offa would be given wider powers to penalise universities who fail to make enough efforts to recruit disadvantaged students.
At present, it can only refuse them permission to charge more than £6,000 a year or fine them if it considers they are failing to honour what is called an "access agreement" aimed at encouraging them to admit more students from disadvantaged homes.
Mr Willetts also indicated that he believed universities would offer their students a better teaching deal – or charter – under the new fees regime.
"One thing that will be very important with the new structure is the quality of the teaching experience," he said.
"I want to see universities competing not simply by saying 'we're charging £8,250 – down the road it's £8,750'.
"I want them to be saying things like 'With your academic work, there won't be more than 30 people in seminars and lectures' and rather than just a vague promise of work experience they will say 'we will offer two weeks in which you will do this, that and the other'.
"I think that will correct some of the historic weaknesses in the system."
The idea of the charter is likely to feature in a government White Paper, scheduled to be published next week.
Earlier this week, Mr Willetts was forced to deny the Government had any plans to allow wealthier parents to "buy" places for their children at elite universities. It is, however, planning to allow universities to offer "off quota" places, where UK students are charged the same rate as overseas students.
What we have learnt so far
* Tuition fees are capped at £3,290 now but this will rise to £9,000 in 2012.
* Most universities have declared what they want their new fees to be but they won't know for sure until a ruling by the Office for Fair Access in July.
* The salary threshold at which graduates will have to start paying off the loans they take out to pay the fees will rise from £15,000 to £21,000.
* Loans still not cleared 30 years after graduation will be scrubbed out.
* Of 95 universities to declare their intentions so far, 65 opted for the £9,000 maximum. Only one is below the £7,500 the government expected to be the average.
LSE academics reject top fee
The London School of Economics (LSE) could become the first of the 'elite' universities to vote to charge less than the £9,000 ceiling for fees from next year. The university's Academic Board opted by a margin of one vote for a figure of £8,000 but its decision could still be overturned by the LSE Council when it meets on 25 May.
All the Russell Group and 1994 Group universities which have, so far, declared how much they intend to charge when the ceiling rises in September 2012 from £3,290, are seeking the maximum £9,000.
The LSE's Council will take into account what staff on the Academic Board voted for but will not consider itself bound by it.
And as the margin was so narrow – 68 to 67 against £9,000 and 65 to 64 in favour of £8,000 – the votes by the academics will not even be considered to be a formal recommendation.
The figure decided by the Council will be submitted to the Office for Fair Access. For any fee request above £6,000, a university will have to agree to introduce measures designed to improve access for students from deprived backgrounds.
Other policy meltdowns
David Cameron shocked even seasoned Westminster observers when he ripped up large parts of the Coalition's health policy and said the Government was going back to the drawing board. The changes to the Health Bill have yet to be announced but they will be substantial.
If one policy was going to go down badly with the Tory heartlands (and almost everyone else), it was Caroline Spelman's plan to sell off large tracts of Britain's forests to private companies. Downing Street later admitted that the idea should never have been a policy in the first place, and Ms Spelman was forced into a humiliating public climbdown.
Free school milk
Given that one of his Tory predecessors got the nickname "Thatcher the milk snatcher" for a similar policy, quite how the Tories thought withdrawing free school milk for children from poor families was a good idea is perplexing. It was rapidly dropped when it became public.