The long-awaited and overdue government review of student financial support has been delayed until the late autumn.

The review, announced by the prime minister at last October's Labour Party Conference, started off looking at the return of student grants and the introduction of a graduate tax.

But, after a failure to agree, ministers have now delayed any announcements for a further three months.

Tony Blair launched this review after Labour's post-election analysis of doorstep opinion showed the abolition of grants remained unpopular with voters.

The review was due to have reported early in the New Year.

Wrangling

It was initially suggested that there could be a return of means-tested grants, funded by the introduction of some form of graduate tax.

But discussions between the Department for Education, the Treasury and Downing Street failed to reach an agreement - and the graduate tax proposal appears to have been dropped.

The review had still been expected to report before the summer, possibly as part of the forthcoming spending review.

But now it has emerged that the issue has proved so difficult that any announcement has been delayed for a further three months.

It will now form part of a wider review of Britain's universities, with a possible White Paper on higher education to be published in late October.

'Turf war'

The shadow higher education minister, Alistair Burt, called the delay "a disgrace".

"As an example of how not to do things, student finance under Labour takes some beating," he said.

"Having made matters worse for students with their botched reforms in 1997, it is now clear they have no idea what to do, and that Treasury, Number 10 and the DfES are engaged more in a war over territory than in finding an answer to the problem."

He said a first year undergraduate could come up with an options paper in 10 minutes.

Uncertainty

The Liberal Democrat higher education spokesman, David Rendel, said: "This delay leaves young people in a state of great uncertainty.

"They won't know whether or not to take a gap year, as they don't know what the financial regime will be on their return.

"At last October's Labour Party Conference we were assured that the review would be completed by Christmas. Clearly they meant Christmas 2002.

"Such inaction will not help the government's plans to have 50% of British young people participating in higher education by 2010."