David Willetts has defended proposals being considered by the coalition government to allow universities to recruit unlimited numbers of home undergraduates who are able to fund their tuition fees upfront.

The universities and science minister said the idea would help more young people currently missing out on ÖйúAƬ. He denied that such a scheme would merely enable wealthy families to buy places for their children.

Under the proposals - first revealed by Times ÖйúAƬ on 7 May - students who do not take out state-funded loans would be exempt from the current controls on places for undergraduates faced by English universities.

Such students would include not only those with families rich enough to pay fees upfront, but also those who receive sponsorship from charities or community organisations. The approach is similar to the way in which students sponsored by firms are currently treated as "off quota".

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Mr Willetts stressed that increasing social mobility and ensuring that all applications were judged against the same "high academic standards" would be a "key" part of the plans. But he said he wanted to find ways to expand the system without extra cost to the Treasury.

"I am in the uncomfortable position every autumn of accepting that there are people who wish to go to university but there aren't enough places. The question is whether we can find extra ways of helping them get into the system even when public spending is limited," he said.

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However, the National Union of Students said it would create a "two-tier" system and disadvantage poorer and middle-income students. And Gareth Thomas, Labour shadow universities minister, claimed it would "drive a coach and horses through the idea that ability is key to getting into university".

Currently, about 14 per cent of home students do not take out a fee loan. But if they are undergraduates taking a first degree, they still count towards the limit on numbers for universities, which is imposed to control public spending.

simon.baker@tsleducation.com.