CITY council officers have refused to meet thousands of pounds-worth of housing benefit claims from Oxford Brookes university students.
The students now have six weeks in which to bring a test case appealing against the decision by Oxford City Council.
Council staff have been swamped with claims this term after Appeal Court judges ruled that Anthony Webber, a 24-year-old student at Oxford Brookes, should be entitled to income support. They argued his modular course could not be considered full-time - and therefore ineligible for benefits - because it was flexible.
Mike Slater, city council benefits service manager, said: "We are taking the view that they are in receipt of a grant as students on a full-time course of study whether it is modular or not.
"We will use the same definition for the housing benefit regulations as for grants." He said that students taking a year out from their courses or part-time students who had previously studied full-time would now be eligible for benefits, after individual assessment.
Susan Harbour, a student welfare officer at Oxford Brookes, said the union was still awaiting formal notification from the council of its decision and was meanwhile taking legal advice.
"If they turn students down flat we will challenge it," she said. "There is enough in the judgment of the Webber case for us to believe we have a strong case."
If a test case rules in favour of Oxford Brookes it could cost the Government millions of pounds in benefit claims from students in higher and further education.
A spokeswoman for the National Union of Students said the union would await the outcome of the Oxford Brookes test case before tackling the issue nationally.