The moves come in the ÖйúAƬ Funding Council for England¡¯s response to last week¡¯s grant letter and reveals the body will allocate a total of ?5.31 billion in funding to universities in 2012-13, with ?3.21 billion for teaching and ?1.56 billion for research.

The announcement is broadly in line with the expected first major drop in teaching grant next year as higher tuition fees kick in.

Hefce¡¯s statement shows funding for new students in 2012-13 will only cover high-cost subjects and amount to just ?145 million, far less that the ?2.4 billion to cover those still paying lower fees.

However, Hefce also revealed that its teaching grant next year will be cut by an extra 1 per cent ¨C the equivalent of about ?30 million - due to measures taken by the government to tackle over-recruitment by universities in the current academic year.

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This is because the Department for Business, Innovation and Skills is setting aside money to address the pressure on its budget, which will come from existing funds this year but may not in the future.

Meanwhile, postgraduate taught provision received a boost as Hefce said it would give institutions an extra ?1,100 per student starting courses next year in subjects other than the lowest-cost arts and humanities disciplines.

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Effectively, the measure continues funding for taught postgraduates in 2012-13 at roughly the same level as present so such courses are not hit by the same cuts to funding being levied on undergraduate provision.

The ¡°interim¡± measure is likely to be welcomed by university leaders, who have warned that cuts to teaching funding - coupled with the inability to take out state loans for postgraduate study ¨C risked damaging such provision for home students.

Sir Alan Langlands, Hefce¡¯s chief executive, said the body welcomed the grant letter¡¯s ¡°recognition¡± of the importance of postgraduate provision.

¡°As the grant letter requests, we will review participation levels for this group of students as part of our wider remit to monitor the impact of the reforms.

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¡°In the meantime, we will provide additional funding for teaching postgraduate students who commence their studies from September 2012,¡± he said.

Michael Farthing, chairman of the 1994 Group of smaller research-intensive universities, said Hefce¡¯s extra postgraduate funding represented ¡°a breakthrough moment¡± given the issue had been ¡°ignored for far too long¡±.

But he added that there was ¡°still work to do¡± to help postgraduates get access to affordable loans to cover fees.

simon.baker@tsleducation.com