Conservative peers say they are expecting support from Liberal Democrats and possibly Labour peers in a debate which aims to highlight the threat to an Oxbridge approach to teaching which has endured for 700 years.
Baroness Blatch said yesterday that the attack was part of "the mean politics of envy" characteristic of the Government. She spoke of strong rumours of a personal vendetta by Baroness Blackstone, the higher education minister.
She said: "We know people who have been to see Tony Blair about this. We know that there is a division between the Department for Education and Downing Street."
The department dismissed the idea of a vendetta as "ludicrous".
Ministers are examining the pounds 19m paid to Oxford and the pounds 16m to Cambridge in college fees each year at the suggestion of the Dearing review of higher education which reported in July. The fees help fund tutors and college libraries.
Last week, the Higher Education Funding Council agreed a series of options as its advice to ministers on Oxbridge fees. One option might be to pay all or part of the fees to the two universities rather than to individual colleges.
Lady Young, chairman of the association of Conservative peers, said: "The expenditure is a drop in the ocean but to Oxford and Cambridge it is vital, especially for the poorer colleges. If this money goes, my old college, St Anne's, would lose three-quarters of a million a year." Options for Oxbridge included charging top-up fees and taking only rich students, or the end of the tutorial system and job losses, she said.
Lord Beloff, a Tory peer and former Oxford don, said: "The fact that not every university can operate this system does not make it less valuable."
A spokeswoman for the department said: "Ministers ... will look at what the funding council have to say and announce their findings."