The Prime Minister is expected to announce 10,000 extra university places today in an attempt to plug a funding gap that will leave tens of thousands of applicants without places in September.

The Times has learnt that Gordon Brown will make the announcement to MPs at the Commons Liaison Committee, which meets twice a year.

The Government prevented universities from recruiting as many students as they wanted this year because of a funding shortfall of £200 million. This, combined with a 10 per cent increase in applicants for degree courses, resulted in universities estimating that 50,000 applicants would be denied a place.

Mr Brown’s announcement will partially redress the problem, but could still leave tens of thousands of teenagers in the dole queue this autumn. Employment prospects are bleak for those trying to find work straight from school during the recession.

The Prime Minister is bowing to pressure from vice-chancellors and other influential figures in higher education. Universities say that they have the capacity to take the additional students but not without funding, which ministers were, until now, refusing to provide.

Providing 10,000 extra student places would cost an estimated £50 million — but it is unclear whether the Treasury would be prepared to find that amount of money.

The Government has already promised an extra £200 million to local authorities so that they can meet a rise in demand for primary school places.

The Government is considering offering students the chance to avoid tuition fees if they forfeit their right to other financial support, such as grants and loans. That would save the Treasury up to £30,000 a student over a three-year degree and could be implemented as part of the package expected to be announced today.

Ministers had ordered universities not to take more students than their allocation and threatened them with hefty fines if they did so. Only 3,000 extra places are on offer for full-time undergraduates, but 52,000 more have applied this year than last.

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