It is either an overdue reform, which will bring greater fairness for disadvantaged school-leavers, or it is a recipe for chaos and the destruction of lasting relationships between schools and universities.

This thorny issue - currently causing consternation in the Department for Education and Skills - is known by the rather clunky title of Post Qualifications Admissions or PQA. It is all about moving from the current system of university admissions based on predicted A-level and vocational qualification grades to a system based on actual grades. This month the Government is due to publish its proposals for the move towards PQA.

Yet, behind the scenes, a major political battle is going on. The elite universities want to dilute the PQA plans. Ministers insist they must still happen.

What is the background to this dramatic face-off, which will have huge implications for school-leavers and for schools?

Back in September 2004, after years of sitting on the fence, the Government finally came out in favour of PQA. This followed the report of the Admissions to Higher Education Steering Group, led by Professor Steven Schwartz, which enthusiastically backed PQA as a fairer system that would deliver the Government’s aim of widening participation to students from less privileged homes.

The Schwartz group argued that up to a half of all predicted grades were wrong, meaning that university selection was based on highly unreliable data. It concluded that “the current system, relying on predicted grades, cannot be fair”.

That seemed to mark a watershed. Charles Clarke, the then education secretary, said it was time to make PQA achievable. He set up a task force within his department, headed by Sir Alan Wilson. It looked as if it would be just a matter of time before one of the holy grails of university admissions would be achieved.

School leaders welcomed the breakthrough. The Secondary Heads Association (now the Association of School and College Leaders) had argued the current system was inequitable and disadvantaged students from lower income backgrounds.

The ASCL called for a two-phase model. Before results day, there would be a registration phase during which applications could be made, interviews conducted, and paperwork completed. After the results are published, there would be an application phase, when students make firm applications and universities make a quick response, based on known examination results.

This full-blown PQA could be achieved, according to ASCL, providing the time between the A-level results and the start of the university year is increased from the current five to 11 weeks.

This could be done by starting A-levels earlier, speeding up the processing of results, and postponing the start of the university term for first-year students to early October.

The Government welcomed these proposals as extremely helpful and the baton passed to Sir Alan’s group.

Until this point, the universities had either welcomed the proposals or - more ominously - remained silent. However, as Sir Alan toiled away in the DfES, the elite universities started their lobbying.

Although many universities claimed still to support the principle of PQA, they said they feared the disruption it would cause. They reminded ministers of the turmoil that had surrounded the speedy introduction of the A-level reforms of Curriculum 2000.

A split emerged within the university ranks. Most of the newer universities urged a full-blown PQA while others began to argue that the aims of PQA could be achieved in other, less drastic ways.

David Law, academic registrar at Warwick university, summed up the concerns of these universities when he told a recent London conference that he was “really rather doubtful” that PQA was necessary to deliver the improvements that he accepted the system needed. He said admissions tutors should not rely 100 per cent on predictions and that, at Warwick they also used “a variety” of indicators of the potential to thrive at university.

He did not wish to stop using headteachers’ predictions, as his university valued the close relationship this brought with schools. He added that, while it was true half of all predictions were wrong, they were not inaccurate by much.

Meanwhile some universities started to doubt whether PQA would actually favour those it was meant to help. They suggested that the inaccuracy of predicted grades did not favour the elite school sector but students from more modest backgrounds, and particularly FE colleges.

In fact, as UCAS research has shown (see box left), the reliability of predicted grades is less than 50 per cent, with most predictions erring on the optimistic side. However, the great majority of predictions are within one grade of the actual result.

The real issue, though, is the extent of under-predictions, which arguably are most likely to limit students’ choices and ambitions.

UCAS found that under-predictions are not evenly spread. Students from poorer backgrounds and FE colleges are more likely to receive under-predictions than middle-class students and pupils at grammar and private schools.

As the lobbying continued, Sir Alan put forward two options for consultation.

Option A is a modification of the headteachers’ recommendation. All students will apply ahead of the results but there will be no binding offers until grades are published. Under this option, students can express interest in up to four university courses, instead of the current six. The universities can indicate the likelihood of students gaining a place but no binding offer will be made.

Then, post-results, there will be three time-limited application rounds, with students able to make applications based on the earlier expressions of interest or, if they wish, entirely new choices.

Option B, however, offers a very different way forward, reserving only a quota of places - as few as 10 to 15 per cent - for the post-results phase.

Under this option, the pre- A-level predicted grades system will continue but with students able to hold just one conditional offer, without the current second insurance offer. Providing they meet the offer, they will get their place.

Then, after the results are known, there will be a new time-limited application round for the quota of places reserved for PQA.

During this round, students whose results turn out better than expected can, if they wish, make new applications, while keeping their conditional offers open.

This process could be described as trading up. The argument for Option B is that it means less disruption to the system while leaving a door open for students whose predicted grades turn out to be too low or who, once they have got their results, wish they had been more confident and applied for a more prestigious course. The disadvantage is that only a proportion of places will be reserved for these post-results switchers.

Martin Ward, deputy general secretary of the ASCL, says he would be disappointed if option B prevails as it would be “a missed opportunity” to move to a full-blown PQA system. It would still leave intact, he says, unfair aspects of the current system such as the first-come-first-served approach and the lack of a “gathered field” of applicants.

The ASCL also believes that a post-A-level application system would give sixth-formers several extra months of maturity before committing themselves to their university choice.

However, after Sir Alan’s report, option B looked the likely winner.

Then, as time went on, the powerful elite universities seemed to have persuaded the task force to dilute the changes even more.

These limited changes, to start in 2008, amounted to keeping most of the current system, with minor modifications, but adding a short “trading up”

period post-results when students could make new applications if their grades were better than expected.

Crucially, no places would be reserved for after the results are out. This very limited change - not really PQA at all - would have kept the elite universities happy.

But then, at the last meeting of the task force, Bill Rammell, the higher education minister, surprised everyone by insisting that this month’s announcement must at least set out a timetable for progression towards full PQA.

As one insider to the task force put it, this was “a real shock, just as we thought we were close to a deal”.

It is now all about politics and the Government’s commitment to widening participation, an issue close to Gordon Brown’s heart.

This political wrangling has been going on behind the convenient smokescreen of the more open rows over the Government’s school reforms.

The elite universities say all that matters is that there be scope for the very small number of students who exceed their predicted grades to be able to reapply. The newer universities disagree.

As Pam Tatlow, chief executive of the Coalition of Modern Universities, says: “We want a time-scale to move to full PQA, we don’t want anything half-baked.”

Mike Baker is education correspondent of BBC News