Hundreds of public schools could face crippling fines over allegations that they artificially inflated pupils’ fees.

The Office of Fair Trading is investigating whether some of the country’s top independent schools are breaking the rules by colluding to fix fees and rig the market.

While the inquiry initially covered only a handful of schools - including Eton and Winchester - it is now thought that the investigation could look at more than 700 fee-paying institutions across Britain as fresh evidence surfaces.

Those schools found guilty could be forced to pay fines of 10 per cent of their turnover over three years. This would cost them millions of pounds.

The shockwaves in the sector could go further still, with parents threatening to revolt over the inflation-busting fee increases. This year, schools across the country imposed a record increase in fees of between 8 and 12 per cent. The schools defending themselves in the inquiry deny operating a cartel and say that any information given to other institutions was vague and gave only a general indication of fee changes.

But The Times has reported that correspondence between bursars of many top public schools went much further, with emails listing details such as fees, sibling discounts and staff salaries.

The paper said: “Spreadsheets were circulated showing school-by school estimates of fee increases so that each bursar could see whether or not his proposal was in line with competitors.”

As the pressure mounts on individual schools, some are thought to be talking to the Office of Fair Trading about brokering deals to either reduce or cut potential fines in exchange for co-operating with investigators.

The Independent Schools Council, which represents 1,300 out of the 2,400 private schools in the country, knows of four helping with OFT investigations - Eton college, Winchester college, Westminster school in London and William Hulme’s grammar school in Manchester.

Eton and Winchester refused to comment on claims that they are seeking such immunity deals.

Eton’s bursar Andrew Wynn, said: “Eton is co-operating fully with the Office of Fair Trading in an investigation.”

A Winchester spokesman said the college was working closely with the OFT but would not make further comment until the investigation was complete.

An OFT spokesman said investigations were carried out at a number of public schools but that “no assumption should be made at this stage that there has been an infringement of competition law”.

* The Independent Schools Council said that according to a survey of 30 universities and students from 280 fee-paying schools, there was less evidence this year of leading universities discriminating against privately-educated pupils.

However, Bristol and Nottingham rejected more private pupils this year in maths, French and English and the rate increased by 34 per cent in law at Bristol. Despite rejecting an extra 20 per cent of candidates to read French, Oxford reduced its number of rejections, as did Cambridge.