A 300-page report with six appendices and a dozen subsidiary papers, which will be published next month, aims to shape the size, structure and funding of higher education for the next 20 years.
Student leaders last night reacted angrily to the news that committee members who met on Thursday, under the chairmanship of Sir Ron Dearing, have backed two main options for tuition fees.
One is a proposal that students should be charged a flat tuition fee of around pounds 1,000 a year, calculated as a quarter of the average cost of educating a student, so that the price of a degree for most students would be pounds 3,000.
The second is a scheme under which students would pay a quarter of their actual course costs, as already happens in further education. That would mean that some students on expensive courses (such as medicine) would pay as much as pounds 2,000 a year, while those on some arts courses would pay only a few hundred pounds.
The pros and cons of both proposals - and several others - are discussed in the report. Insiders said yesterday that it would show a slight tilt, but no more than that, in favour of the flat-rate fee.
Students would be able to finance their fees through a loan repayable after they graduate and find work.
David Blunkett, the Secretary of State for Education and Employment, will have to decide whether to accept the principle of fee-charging. So far he has said that he is not persuaded of the need to charge fees. However, Tessa Blackstone, the higher education minister, told The Independent last month that it had not been ruled out.
Sir Ron's inquiry was set up with the support of both Labour and the Conservatives, on the understanding that there would no changes to higher education funding until it had reported.
He will present his final draft of the report at the beginning of next week, but the 16-member committee has accepted that charging fees is the only way to ease universities' financial plight - they face cuts of around 6 per cent over the next three years.
However, members have agreed to leave to the Government a decision about how students finance their living costs. Some committee members want to retain the present system of financing maintenance through a combination of grants and loans because they fear that the abolition of the grant may deter poorer students from going to university.
The report also includes the proposal in Labour's manifesto under which board and lodging would be financed solely through a more generous system of income-contingent loans. Means-tested scholarships would be on offer. Mr Blunkett argued before the election that the ending of the grant would make fee-charging unnecessary.
The committee has turned down a recommendation from the Department for Education and Employment that the expansion of higher education should cease.
In addition, it has made no recommendation on whether different universities should charge different fee levels. Members believe that individual universities should retain their present power to decide on top-up fees.
So far, none has done so, but students' leaders believe the report will encourage this. Douglas Trainer, president of the National Union of Students, described the tuition fee proposal as the thin end of the wedge.
It would be the green light for vice-chancellors to implement higher fees, and for the Treasury to increase these fees rapidly. Many students are going to be priced out of specific courses or specific universities.
Students would have preferred the Labour Party option of loans for maintenance, but vice-chancellors argued for a new, fairer loan system for board and lodging - plus loans for part of the tuition fee.
Some vice-chancellors argue that a flat-rate fee is at odds with the inquiry's wish to preserve a diverse system. Different types of universities, they say, have different costs. Others say that universities should be able to charge top-up fees, backed by scholarships, so that people have the choice of picking excellence.
A tax-free savings scheme for students, and learning accounts for employees are expected to be mentioned in the report.
School funding, page 8