Students at some specialist dance and drama schools will no longer have to pay high private tuition fees but will instead be funded largely by the state.
An order creating a new Conservatoire for Dance and Drama, eligible for funding by the Higher Education Funding Council, has been passed by Parliament and came into force on August 1. The conservatoire's two founding members are the Royal Academy of Dramatic Art and the London Contemporary Dance School.
A spokeswoman for the Department for Education and Skills said: "Higher education students at Rada and the LCDS will receive the full public student support package that other university students receive. They will no longer have to pay the high private tuition fees that students at private dance and drama schools have to meet."
Some 300 higher education students would be registered with the conservatoire, she said.
More schools are being approached to join up, including the London Academy of Music and Dramatic Art and London's Laban Centre for dance.
The Laban Centre is thought likely to join in 2002 when its new building, which is under construction, is completed.
Lamda's principal, Peter James, said: "Discussions are in the very early stages. There have been initial approaches, and we are beginning to go through the pros and cons of being a part of it. On the surface it looks like a good thing, and we are very excited."
The move to Hefce funding would mean Lamda having to link up with a higher education establishment. Discussions are under way with an as yet unnamed institution. Laban already has a relationship with City University.
A central administration service will be set up for the conservatoire. Hefce said it did not yet know what level of funding the body would receive.
The conservatoire will have a federal structure, the DFES said, with students being taught either at Rada or the LCDS. The schools are expected to make formal statements about how the scheme will work later in the summer.