Undergraduate tuition fees of £9,000 - the maximum that universities will be allowed to charge from 2012 - would amount to a 40 per cent rise in teaching funding for the majority of courses, the universities and science minister has said.
Reiterating his advice that fee levels at the top of the new threshold would be "extremely hard for institutions to defend", David Willetts accused some universities of "rushing to £9,000 without thinking about the impact on students".
He made the comments in a speech at the University of Nottingham, in which he also confirmed the government's warning - revealed in Times Higher Education last week - that it will cut higher education funding if average fees are higher than £7,500 in the first year of the new regime.
His remarks came as the government stepped up the pressure on universities as they near decision time on what fees to charge in 2012.
In a television interview this week, Mr Willetts suggested that universities could "end up looking rather silly" if they charge the maximum fee and then see students opt for cheaper alternatives.
At the Nottingham event on 17 February, the minister was met by a group of about 30 anti-cuts protesters outside the venue for the second Lord Dearing Memorial Conference. Some wore balaclavas to thwart video surveillance by police and a number confronted delegates, demanding to know what they were doing to oppose the cuts to university funding.
In a sign that more events in the sector may attract protests, a group calling itself Nottingham Students Against Fees and Cuts says on its website: "We are not prepared to sit around and wait while expensive knife-sharpening conferences happen at our expense."
Mr Willetts told the conference that "nearly 80 per cent of students [are on courses that] fall within the Higher Education Funding Council for England's band C or D, the lower levels of teaching grant which cover usual lecture and seminar-based courses".
He said funding for band D subjects stands at a total of £6,000, made up of a combination of the tuition fee and Hefce teaching grant.
"In 2012 prices, this would be more like £6,350," Mr Willetts said. "So a charge of £9,000 represents an increase of more than £2,600 - or over 40 per cent - in teaching resource. For students in other Hefce bands, the increase would be around 20 per cent. A one-off increase of this size will often be extremely hard for institutions to defend."
Mr Willetts said "alternative providers", such as further education colleges and private institutions, may offer courses for lower fees, "so universities should not ignore the competitive challenge that they will face".
The Browne Review calculated that an average fee of £7,000 would be needed to make up for the cut to the teaching grant - which will fall by 80 per cent by the end of the Comprehensive Spending Review period - and maintain current levels of funding. The government envisages average fees of £7,500.
Mr Willetts pointed out that the public purse would be hit if universities cluster around £9,000, as the loans system would still be heavily subsidised by the taxpayer.
"If graduate contributions end up higher than £7,500, we would...be forced to find savings from elsewhere in higher education," he said.
Last week, THE reported that the government had warned the academy of the consequences if it were forced to make savings to cover the costs of higher than expected fees. The vice-chancellors of research-intensive universities were reminded of their reliance on science funding, while teaching-focused institutions were told that their student allocations could be threatened.
On social mobility, Mr Willetts repeated his support for the use of contextual data in selecting students, which was set out in his recent letter to the Office for Fair Access.
He said universities should "find people with the greatest academic potential, even if that's been hidden by poor-quality schooling".