The move to insist that students pay for part of their education has been described privately by education ministers as "the most difficult policy decision on education faced by the Government".
The announcement is expected to follow the publication of Sir Ron Dearing's independent report into higher education funding - which is due out on Wednesday.
Sir Ron is expected to recommend that students be offered loans to cover part of their tuition fees and ministers will use his recommendation to justify the policy move.
Before the election, Labour told the Dearing inquiry that it wanted to abolish the grant for living costs, which would be repayable through a loan, while tuition would remain free.
However, the inquiry's analysis suggests that this would not produce the money which universities need.
The Treasury is believed to be particularly keen on the move to demand partial repayment of tuition fees as that will enable the Government to show its commitment to university expansion without demanding more money from the taxpayer.
One senior Whitehall source said: "I don't think we have got any other option than to grasp the nettle on this one."
The Dearing report presents a number of options to ministers, but indicates clearly that graduates should be required to repay part of their tuition fees.
It lists a number of options for recouping tuition fees, but most of the committee favoured a repayment of pounds 1,000 a year - compared with actual fees which average between pounds 4,000 and pounds 5,000 and can be much higher for medical degrees.
The committee members felt that the pounds 1,000 option provided the best balance between raising money to fund universities and not deterring people from becoming students.
Repaying tuition fees would immediately generate income for the Treasury, which would be under pressure to pass all its savings on to universities.
The Government may encounter stiff opposition from its own back benches - whose members include six past presidents of the National Union of Students.
A spokesman for the NUS said last night that it would remain "fiercely opposed" to any suggestion that students should pay towards their tuition costs.
He said the NUS had taken what it considered a "radical" step in finally accepting that graduates should contribute towards their living costs while at university.
"But to include tuition fees in the debt graduates are expected to repay would be a step too far," he said.
He added: "Once the principle of free tuition is gone, there will be nothing to stop governments in the future asking students to pay a greater and greater contribution.
"Neither would there be anything to stop universities increasing tuition fees, or deciding that the education they had to offer justified higher fees than other institutions."
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