He was speaking after the Act, which introduces means-tested student tuition fees and abolishes the maintenance grant, gained Royal Assent and passed into law.

Mr Blunkett said: "The Act puts in place new funding arrangements for higher education designed to address the funding crisis we inherited.

"Savings from the new arrangements will be used to improve quality, standards and opportunities for all in further and higher education.

Students face tuition fees of up to �1000 a year from September

"The latest applications numbers suggest that young people and their families understand the fairness of our proposals, as there are more school leavers applying to go to university this year than last."

The president of the National Union of Students, Andrew Pakes, said the new arrangements were unfair and unlikely to work.

"This will not solve the university funding crisis," he said. "We believe the government is being over-optimistic about the amount that can be raised from fees and estimate a funding shortfall of �36m on current plans.

"It's wrong that students should be the only ones who have to pay towards improving higher education. We believe business and industry should be making a greater formal contribution as they are the ones who want high-quality graduates."

Efficiency savings

The government is assuming that in 1999-2000, students will contribute some �250m in fees and that it will save �100m by not having to pay maintenance - now replaced entirely with loans. This comes to more than the total increased funding announced for higher education in England of �280m.

The Department for Education says the money will meet the demand by the Committee of Vice-Chancellors and Principals that universities and colleges should not have to make efficiency savings of more than 1%. The committee says the department has "not yet provided data to substantiate this claim" - a matter it is pursuing.

The money is also supposed to cover the cost of providing for 35,000 extra students.

While most of what was announced in the government's comprehensive spending review was for three years, to the end of the parliament, nothing is being said about higher education funding beyond 1999-2000 until this autumn, probably October.

The Higher Education Funding Council for England says this is because of the ongoing consultation on the government's 'Learning Age' Green Paper on increasing access to higher education. The consultation deadline is the end of next week.

General Teaching Councils

Mr Blunkett said other reforms in the Act would raise the status and standards of the teaching profession in the nation's schools.

These include: the setting up of General Teaching Councils for England and Wales from the year 2000 to regulate the profession, the introduction of compulsory professional qualifications for headteachers, and the inspection of teacher training courses by the Office for Standards in Education.

Mr Blunkett said: "These reforms are long overdue. Improvements in teacher training and the development of a General Teaching Council are all vital ingredients of a forward-looking teaching profession ready to meet the challenges ahead."

Scotland has had a General Teaching Council for many years. The Northern Ireland Office has yet to come up with proposals to have one there.