Students are to be given a role in holding universities to account, it has been announced.
The National Union of Students (NUS) has been asked to help regulate institutions as part of the Government's latest bid to reform higher education.
The move is part of a plan by ministers to give more powers to the Higher Education Funding Council for England (HEFCE) - the body which hands grants to universities for research and teaching.
Under the proposals, HEFCE has been tasked with working with universities, agencies and the NUS to monitor institutions "with a focus on protecting the collective student interest".
The funding council is to be given powers to impose tough new sanctions on universities that fail to meet yet-to-be decided conditions. These sanctions include preventing an institution's students from obtaining student loans.
In a written ministerial statement, Universities and Science Minister David Willetts said the new regulatory system for the higher education sector will be put in place without the need for new legislation.
The coalition Government had originally planned to introduce a new Higher Education Bill to regulate the system alongside the move to triple tuition fees to a maximum of £9,000, but this has been dropped.
HEFCE has also been asked to set up a new register which will give information on how universities are funded and what they have committed to do in areas such as providing information for students, handling complaints and making sure that all prospective students have a fair chance of gaining a place.
In a letter to HEFCE chair Tim Melville-Ross, Mr Willetts said he wants the funding body to take the lead in working with others, including the NUS, to "identify and address issues within higher education providers and take appropriate remedial action."
The minister told the Times Higher Education magazine that the NUS is viewed as "a crucial ally in the agenda for putting students at the heart of the system."
NUS president Toni Pearce said: "We welcome David Willetts's acknowledgement of the important role that NUS and our members can play in shaping the future of education.
"HEFCE will now play an important role in helping to protect the student interest and we look forward to working with them and others to bring about better regulation of the sector in a way that will really benefit students.
"As significant as this move is, it in no way negates the pressing need for protection for students to be enshrined in a higher education bill, which had been a solid government commitment until it was quietly dropped last year."
Mr Willetts said: "Our reforms are putting students at the heart of the system. They will ensure that universities are well funded and able to deliver a better student experience while promoting social mobility and widening participation."
He added: "I would like to thank the Regulatory Partnership Group for coming up with a framework which ensures proper accountability for public funding, protects the interests of students, gives priority to quality improvement, safeguards institutional autonomy, and sustains the reputation of English higher education."
Mr Melville-Ross said: "The new arrangements are designed to safeguard the interests of students, ensure proper accountability for the use of public funds, and protect and enhance the reputation of higher education in England."