The Welsh Secretary said top-up fees would help young people

In a speech to the Welsh assembly, he said the move would ensure "universities will be placed on a sound financial footing".

His visit to Cardiff Bay was the first time AMs had had the opportunity to debate whether or not top-up fees should be introduced in Wales - under a power transferred to the assembly.

It came as students from across Wales took their protest against top up fees to the Houses of Parliament.

Opposition parties wanted to hear how Mr Hain would explain the Higher Education Bill unveiled in last week's Queen's Speech, which proposes allowing universities to charge students up to �3,000 a year.

Take that poisoned chalice away and come back with one full of cash Ieuan Wyn Jones

The Bill - to be published after the Christmas break - is seen as a central plank in Tony Blair's reforms of the university sector.

If adopted, the move would almost triple current tuition fees, although students would repay them after graduating rather than meeting the cost up front.

Labour says the move is fair because repayments on the fees would begin only after graduates were earning �15,000.

Students from across Wales are stepping up their opposition

The government claims the change would end the situation where non-graduate taxpayers help foot the bill for students who end up earning more because of going to university.

But more than 140 Labour MPs have criticised plans to allow universities to charge students for their tuition.

The Bill gives the Welsh assembly discretion over whether or not to introduce the fees in Wales but opposition parties have criticised Labour for pushing through the policy.

They claim it would give the assembly nominal power over fees but not the financial freedom needed to make a truly independent decision.

But Mr Hain defended the fees move, saying: "New grants and extra support will enable more young people to benefit from higher education.

"Up-front tuition fees will be abolished, switching the burden from parents to graduates to pay back only if they are in work and only if earning more than �15,000 pa."

Student lobby

But Plaid Cymru assembly group leader Ieuan Wyn Jones said: "Our students won't have any choice - you have told us what the options are - top up fees or find the shortfall from other budgets.

"Is that a real choice? In my view that is a poisoned chalice you are handing to (Education Secretary) Jane Davidson.

"Take that poisoned chalice away and come back with one full of cash."

Assembly Tory group leader Nick Bourne said: "Transferring power without the funding is useless - worse than useless as it raises false hopes."

Lib Dem group leader Mike German said: "I welcome Mr Hain on his annual visit - like Father Christmas, but most of the presents you are bringing we don't want."

Students from across Wales have stepped up their opposition to the plans with a national lobby of Parliament.

Around 200 people joined a The National Union of Students lobby of MPs at Westminster.