The Government was facing mounting fury tonight over plans to charge students up to £9,000 a year in tuition fees.
Under the proposals, which represent the most radical shake-up of student funding for decades, the fee cap will be raised to £6,000, with universities able to charge up to £9,000 - triple the current cap - in "exceptional circumstances".
Tuition fees currently stand at £3,290 a year.
It opens the door for England's top universities to charge the maximum amount, providing they ensure access for disadvantaged students.
The changes are politically explosive as many Liberal Democrat MPs, including Deputy Prime Minister Nick Clegg, publicly pledged during the General Election campaign not to allow fees to go up.
The proposals, announced by universities minister David Willetts today, immediately led to fresh concerns about the introduction of a two-tier system, with poorer students being priced out of elite institutions.
Sally Hunt, general secretary of the University and College Union (UCU), said: "The government is going to have to work hard to convince anyone that the commitments on widening participation are anything other than a token gesture.
"There is no doubt in our mind that these plans will lead to a two-tier system where many people base their choice of degree on what it costs. This is a bad situation for the student, for the country and for the university. We need our brightest students choosing the courses that best suit their talents, not ones within budget."
Aaron Porter, president of the National Union of Students (NUS), accused ministers of failing to provide reassurances on access, employability or the quality of courses.
"The only things that students and their families could expect in return for higher fees are higher debts," he said.
The NUS has previously called plans to treble tuition fees "dangerous" warning there was a risk students would be unable to afford to attend England's elite universities.
In a statement to the Commons earlier, responding to the proposals in last month's Browne review, Mr Willetts said: "We believe a limit is desirable and are therefore proposing a basic threshold of £6,000 per annum, in exceptional circumstances there would be an absolute limit of £9,000."
He insisted it was a "good deal for universities and for students".
Mr Willetts later said "exceptional circumstances" could include an institution that decides to offer a two-year degree instead of the usual three. He could not say how many would apply.
Institutions who apply for exceptional circumstances, will have to sign up to a £150 million National Scholarships scheme, and face new sanctions requiring them to offer outreach activities to attract poorer pupils.
Universities that fail to make progress towards targets on recruiting poorer pupils will see a proportion of their extra income diverted to outreach activities.
Measures to help poorer students are likely to have been included partly in an effort to head off a backbench Lib Dem rebellion and expose a serious faultline within the coalition.
Many Lib Dem MPs signed the NUS pledge to vote against a fee hike, with some saying they intended to honour this.
Lib Dem former leader Charles Kennedy, told the Commons he could not "go along with this particular direction of travel".
Greg Mulholland, Lib Dem MP for Leeds North West, conceded the proposals were "more progressive", but added: "I cannot accept that it has to be tied to an increase in fees, and that's something that I cannot and will not accept."
Business Secretary Vince Cable said: "I have been talking to my colleagues both privately as well as collectively, they do understand we have produced a system that is significantly better, and more progressive than the one before."
Shadow universities minister Gareth Thomas suggested the fee hike was a "tragedy for a generation of young people".
Money gained through today's proposals will go towards plugging the gap left by swingeing cuts to the higher education teaching budget, announced in last month's spending review.
Mr Thomas said: "Isn't the reason that fees will be so high very simple?
"Despite the Prime Minister's claim that he wants to see well-funded universities, isn't the truth of what motivates today's announcement is a massive cut in the funding of universities?"
Under the proposals, students will start repaying their loans at 9% of their income at a real rate of interest when they earn £21,000, up to inflation plus 3% for those earning £41,000 or more, with outstanding loans written off after 30 years.
Students who pay off their loans early could be hit with a financial penalty.
A UCU analysis concludes that a graduate earning the national average salary of £31,916 would have a 19.3% higher tax bill than colleagues who had not been to university, for the duration of their student loan repayments.
Teachers, police inspectors and doctors could see their bills rise by around a quarter, it claimed.
The British Medical Association said medical students would be left with debts of nearly £70,000.
Karin Purshouse, chair of the BMA's Medical Students Committee, said: "The BMA estimates that if universities charge the £9,000 rate allowed under these plans, students will see their debts increase to around £70,000. This figure only includes debts incurred from student loans and does not take into account overdrafts, credit cards and professional loans which many students depend on for additional support.
"This will be an enormous financial burden for hard-working families."
Pam Tatlow, chief executive of million+, said it was "unlikely" that the proposals would sustain university funding in the long-term, but Professor Steve Smith, president of Universities UK (UUK), said the package was the "best available funding system" given the unwelcome cuts in public funding.
The Russell Group of elite universities said lifting the cap was a "welcome reform that will help our universities maintain and enhance their world-class status".
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