Charles Kennedy called for US-style modular courses

He said his party would raise the standard of the traditional three-year honours course, demand better A-level grades from school- leavers and reduce the number of places.

Mr Kennedy promised to spend the bulk of the �4bn that a 50% tax band for people earning more than �100,000 would raise on expanding two-year job-related "foundation" degrees.

He would also scrap tuition fees and restore student grants.

'Standards are lowered'

In a speech to the Liberal Future think-tank in London, Mr Kennedy said: "Our universities should not be in the business of dumbing down."

His comments are likely to anger universities, which have already been accused by ministers of running too many "Mickey Mouse" courses to attract more students and money.

He said: "Universities know that they have a choice - sign up sufficient numbers to the courses they specify or go out of business.

"As a result, standards are lowered for some disciplines while on other courses students with first-class qualifications are denied a place."

Abolishing tuition fees payable by students from England would cost �700m, Mr Kennedy added.

'Slightly fewer students'

People who took foundation degrees could turn them into honours qualifications if they wished and would usually attend a university near their home or workplace.

Our ideas would, I believe, result in a fairer system which was far better geared to the needs of the 21st century Charles Kennedy, Liberal Democrat leader

Mr Kennedy said: "I want to see the standards for access on to honours programmes raised. I am in favour of a return to intellectual rigour

"It might be that as a result there were slightly fewer students taking these courses but so be it.

"Our universities should not be in the business of dumbing down.

"Foundation degrees would, in any case, be part of a more flexible system. Able students would be encouraged to use these degrees as an entry into honours programmes when they felt ready to take that step."

As in the United States, students would be able to pick up credits for each module they completed.

Mr Kennedy said: "All could study full or part-time and take breaks without having to start again.

"Our ideas would, I believe, result in a fairer system which was far better geared to the needs of the 21st century.

"The government, by contrast, appears set on erecting a further barrier to such a system by introducing top-up fees."

Roderick Floud, president of Universities UK, which represents vice-chancellors, said: "Universities are not in the business of dumbing down - our business is to identify academic potential and build excellence.

"Maintaining and raising academic standards is in everybody's interests. UUK has said consistently that this is dependent both on raising standards in schools and on universities being properly funded.

"At the same time the sector has worked hard to establish a framework for quality and standards - against which all our degree courses are measured.

"Admissions and the structure of courses are a matter for universities; not government."

Lecturers pleased

The assistant general secretary of the Association of University Teachers, Paul Cottrell, said: "There's an awful lot in Charles Kennedy's statement that could have been drawn from a higher education professional's ultimate wish-list."

He said scrapping top-up fees was "plain common sense".

The proposed new top rate of tax echoed his union's call for higher education to be funded through progressive taxation, "as opposed to wringing students and their families dry through top-up and tuition fees".

"Mr Kennedy's also right to savage the disgraceful fact that university salaries have declined by 40% in comparison to the rest of the workforce."