Ministers are considering making undergraduates pay higher fees for some degree courses than others, it emerged this week.

To sweeten the pill of differential fees, foundation degrees would become far cheaper than the traditional three-year honours course.

Key advisers to the Department for Education and Skills are looking at ways to raise additional funds for universities while also increasing access.

Papers under consideration by the DFES and seen by The Times Higher Education Supplement argue that the single maximum charge of pound;1,100 a-year is untenable and is a distortion of the true cost of higher education.

They argue that it is inequitable to charge the same maximum annual tuition fee, pound;1,100 next year, for a two-year foundation degree, for example in aromatherapy and delivered by a local further education college, as is charged for a three-year honours degree in business studies from a prestigious university.

Advisers are also considering abolishing the interest rate subsidy available on student loans.

The introduction of differential fees will be one of the main issues to be addressed in a White Paper on higher education to be published in late October. Any new fee regime would be delayed until after the next election and would require legislation.

Among the fixed points for the review will be the goal of providing higher education for half of under-30s by 2010 and the principle that students should contribute to the costs of courses. In an interview with The TES’s sister paper The THES this week, Education Secretary Estelle Morris insisted that no decision had been taken to raise charges.

But Ms Morris said: “Government by itself cannot bridge the funding gap, not if we compare ourselves with some of the more generously-funded systems. There is no easy answer - we put in lots and lots of extra money and I know it’s not enough.”

Although she refused to prejudge the White Paper, Ms Morris stressed that Labour’s commitment not to introduce top-up fees applied only to the current Parliament.

“At least we have got to a point where we are having a debate about higher education and student funding. That was not the case at the last election, and that’s progress,” she said.

Ms Morris acknowledges that universities need urgent and sustained injections of cash to compete internationally and cater for a new breed of student. She also concedes that no Chancellor is likely to provide the necessary sums.

But she is reluctant to admit yet that higher student contributions are the only immediate alternative.

Aware that higher education in the US benefits from much more generous donations from alumni and corporations, she is anxious to encourage a cultural shift in Britain. But she adds: “I don’t want to overplay the prospects because it sounds as if I’m looking for a way out of the state paying, but I do want to begin the process.”

Proposals to be contained in the White Paper will promise extra money for universities to “play to their strengths” in teaching or research. But Ms Morris ruled out the creation of a British Ivy League. She said every institution will be expected to play its part in widening access and maintaining a research role.