Lord Mandelson will this week give strong backing to universities that discriminate in favour of applicants from poor families or under-performing schools, arguing that the policy is essential to improve social mobility.

The first secretary of state, who has responsibility for higher education, will also signal widespread expansion of Open University-style distance-learning degrees to enable adults to benefit from higher education without having to give up their jobs.

Mandelson, who will unveil a 10- to 15-year strategy for higher education on Tuesday, believes both initiatives can help universities do far more to improve prospects for bright people whose chances of studying for a degree have been held back by poor schooling or other disadvantages.

Some universities, such as Durham and the medical school at Oxford, give extra points in selection to any candidate from a school with low average GCSE grades. Others give lower offers to candidates from deprived backgrounds.

A Whitehall source said: “He will give a firm nod to the use of ‘contextual data’ [relating to students’ backgrounds]. We certainly want universities to look at potential to succeed, not just grades.”

The source would not confirm elements of the strategy apart from its emphasis on social mobility, but Mandelson is understood to be considering deep funding cuts.

He wants the axe to fall most heavily on poor-quality courses and subjects that do not benefit the economy directly. Hundreds of courses could be at risk, including those with high unemployment rates, those from which large numbers of students drop out and the ones rated poorly by undergraduates in the National Student Survey. Technology and environmental science courses will be among the safest.

Tuesday’s announcement will be followed soon by a review of the £3,225 annual tuition fee, which could be raised to £5,000-£7,000.

Mandelson and David Willetts, the shadow universities minister, have been holding secret talks on who should chair the review. The name they are said to have settled on is Lord Browne, a friend of Mandelson and former chief executive of BP. Browne, president of the Royal Academy of Engineering, is understood not yet to have accepted.

The review is not expected to be completed until after the election, depriving voters of a say in what could be a damaging issue for both parties.

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