A national bursary scheme should be established to ensure that all disadvantaged university students receive the financial help they need, an independent think tank said today.

The Higher Education Policy Institute's (Hepi) review of bursaries highlighted "serious shortcomings" in the current bursary system. It said that under present arrangements, hugely different bursaries were given to poor students with similar needs - a system that was unfair to both universities and the students themselves.

It argued that a national bursary scheme would provide funding to students on the basis of need, not where they study. Bahram Bekhradnia, director of Hepi, said: "The problem with the present arrangement, from the students' point of view, is what a poor student receives as a bursary has nothing to do with what their needs are.

"Instead, it's got everything to do with how many other poor students there are studying at the same university. If the bursaries a university has to give has to be distributed between more people, that means they then have a smaller value.

"With the same amount of money, less socially inclusive universities have fewer poor students to distribute money to, which means much bigger bursaries."

Bekhradnia said that under current arrangements, there was an incentive for bright poor students to go to a university with fewer poor students because it meant a bigger bursary. The review noted that while the research intensive Russell Group universities would give bursaries of around £1,700 per student, other institutions gave bursaries of around £700. It argued that a national bursary scheme would mean equality between disadvantaged students and a simpler system.

Bekhradnia said that the money universities gave to students would be put into a national pot from which bursaries would be given to each student according to need, and simply added on to their maintenance grant.

It would mean that undergraduates at universities with few poor students would end up getting a smaller bursary, while those at an institution with high numbers of poor students could see theirs increase.

The review has received backing from unions and university groups. Wes Streeting, president of the National Union of Students, said: "A national scheme would eliminate bureaucracy and ensure that the millions of pounds of unspent cash for bursaries that went unspent last year reaches the students who desperately need financial support."

University think tank Million+ chief executive Pam Tatlow said: "In spite of warnings at the time, Government ministers opted for a market in student bursaries even though Parliament limited the market in fees for full-time students by voting for a cap of £3,000.

"The inevitable consequence has been inequity for students, no significant gains in fairer access to elite institutions and poaching of less-advantaged students by universities which have failed to deepen access by other means."

University and College Union general secretary, Sally Hunt, said: "Today's report highlights the inequity of the current arrangements and the market in bursaries that has been allowed to develop. We need a simpler and fairer scheme where all students can apply with ease for the money they are entitled to."

But Diana Warwick, chief executive of Universities UK, said: "This is not a new issue. It was debated during the passage of the HE Bill, and rejected. Looking at the impact of fees and the associated support package will be an essential part of the fees review in 2009.

"Given the diversity of views across the higher education sector, it is clear that any future move to a national bursary scheme would raise a number of critical questions which will need to be explored further."

Higher education minister Bill Rammell said there was "no evidence" that students were put off going to university because of a lack of finance. He said: "This comes at a time when we are providing more financial help to students to ensure that anyone who can benefit from higher education has the opportunity to do so."

He added: "Universities are required to pay a minimum bursary to all students receiving the maximum grant. Beyond this, it is for institutions themselves, subject to approval from OFFA (Office for Fair Access), to decide how to support their students."