The change will enable small specialist bodies, such as art and further education colleges, to upgrade, and is likely to herald a period of mergers as they gang together to muster the necessary 4,000 students.

The changes announced by Margaret Hodge, the Higher Education Minister, will also open the door to private companies to gain degree-awarding powers, leading to American-style profit-making universities. But the Conservatives interpreted it as a cynical device designed to ensure that the Government hits its target of getting half of all young people into higher education.

Mrs Hodge said that new universities could start to come on stream from September 2004; the first are likely to be be Bolton Institute and University College Worcester. Other institutions in the frame for university status include University College Northampton, Canterbury Christ Church University College, Buckinghamshire Chilterns University College, Liverpool Hope and The London Institute.

The change, which follows a review by the Quality Assurance Agency, will accelerate the rapid expansion of the sector started by the conversion of polytechnics. At the end of the 1980s, there were 430,000 students at 46 universities in Britain; now there are more than 1.64 million students enrolled at 87 universities.

Critics say that the speed of this expansion has left universities overloaded and under-funded.

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