Ministers are finalising plans to restrict union activities backed by state funding to a list which includes providing welfare, sports and recreation facilities.
Students could then opt in - paying perhaps pounds 70 a year - to join unions which campaign or get involved in politics. These separate campus unions might be obliged to ballot on affiliating to the NUS.
At present students automatically become members of campus unions, which then usually affiliate to the national body. The NUS raises most of its annual pounds 2m income through this route.
The NUS closed shop has long been a bete noire of the Tory right. A Commons adjournment debate last year produced vocal Tory backbench support for an attack on student unions.
Successive Conservative education ministers have tried to break up the NUS but have been hampered by practical problems. Officials have been anxious to avoid the need to amend universities' charters. Moreover, surveys have shown that only between 2 and 5 per cent of union activity is political, the rest being mundane functions such as running bars or sports clubs.
John Patten, Secretary of State for Education, is confident that he is now ready to deliver detailed proposals. These will preserve existing services but assert the 'voluntary principle' for membership of campaigning activities. He expects to publish his plans before the end of July.
At last year's Conservative Party conference Mr Patten said: 'A few students get involved through the NUS in supporting dubious causes of no interest to the great majority of students. In a free country that is their privilege. But why should the taxpayer have to pay for it? We have abolished the closed shop everywhere else. We must not allow it to continue in our colleges and universities.'
One Commons campaigner for the abolition of the student closed shop said yesterday: 'The key thing is that there is a split from the campaigning side. That way extremists can no longer claim to speak on behalf of students.'
Mr Patten's measures are likely to face bitter opposition from the NUS and criticism from the Committee of Vice-Chancellors and Principals. The NUS has been moving steadily to the centre and in March re-elected its president, Lorna Fitzsimmons, a moderate anxious to improve the union's image. In February the union proposed a 'conscience clause' enabling students to opt out of campus unions, in an attempt to head off the threatened changes.
It also suggested that new limits on campaigns could be achieved by making the unions subject to charitable law, and proposed that students be allowed to appeal to an independent ombudsman if they felt their union was guilty of maladministration.