English universities should be free to charge unlimited fees, the long-awaited Browne review of student funding has recommended.
The independent review calls for the current cap of £3,290 a year to be scrapped in order to allow for a 10 per cent increase in student places. Institutions that charge more than £6,000 a year would lose a proportion of the fee to help cover the cost of student borrowing.
Graduates will start repaying the cost of their degree when they start earning £21,000 a year, up from £15,000 under the current system, the review proposes.
Browne, the former chief executive of BP, said: "Our higher education system is world-renowned, but too often it enshrines the power of universities and not the power of students. These reforms will put students in the driving seat of a revolutionary new system.
"Under these plans universities can start to vary what they charge but it will be up to students whether they choose the university. The money will follow the student ,who will follow the quality. The student is no longer taken for granted; the student is in charge.
"We have been guided by three principles: participation, quality and sustainability. Any student who has the academic potential should be able to participate in and benefit from higher education.
"Students do not pay anything upfront. Only graduates pay ... according to the level of their earnings. Under our proposals, the bottom 20% of earners will pay less than today and only the top 40% of earners will pay back close to the full amount."
An increase in fees would contravene a pledge made by all Liberal Democrat MPs, including Nick Clegg and Vince Cable, to vote against a rise, and would put David Cameron's government under pressure. The coalition agreement allows the Lib Dems to abstain but, according to a National Union of Students estimate, nearly 30 of the party's backbenchers are prepared to rebel by voting against the government.