Education Secretary Charles Clarke insists students will have to pay for university after graduation.

The government generated fury among students and parents when it revealed either increased fees or some form of graduate tax would be needed to fill the higher education funding gap.

In an interview with the Daily Telegraph, Mr Clarke said students rather than parents should pay for university education.

Clarke has ruled out large fees upfront

The government is due to publish its proposals on university finance next month, but Mr Clarke has already ruled out large fees to be paid before students take up their places.

As well as the option of a special tax on graduates, it is possible students could be asked to take out large deferred loans to pay fees in an effort to allow candidates from poorer background to attend university.

Mr Clarke said: "The question which is being discussed is - should individuals pay on their own behalf for the education they receive? To which the answer is yes.

"There is a material as well as an educational gain from going to university."

British universities argue they need �10bn extra to compete with American rivals.

And Clarke has still left open the issue of different universities charging different fees.

Critics say this would create a system similar to the US model where elite universities are able to charge more.

Cabinet divided

Imperial College in London has already drawn up plans to charge �10,500 a year or more in anticipation of restrictions on top-up fees being lifted.

The issue of top-up fees has divided the Cabinet, with Scottish Secretary Helen Liddell and International Development Secretary Clare Short among the dissenters.

Home Secretary David Blunkett is also thought to be hostile.

They fear that charging thousands of pounds a year would deter poorer students from going to university.

Chancellor Gordon Brown is also believed to be against top-up fees but is said to be in favour of a graduate tax.