Collaborative bids that widen access to higher education will win the extra student places and funds available for 2001, funding chiefs announced this week.
However, they acknowledged that only a small proportion of students will take the new foundation degree, despite it being trumpeted by education secretary David Blunkett as the means of expanding higher education.
Universities and colleges had already been asked to formulate bids for prototype foundation degrees. This week they were once again asked to bid, this time for extra student places at foundation degree level.
To encourage institutions, the funding council will waive the requirement for universities and colleges to demonstrate that they meet priorities such as widening participation, if the extra places for which they are bidding are at foundation degree level.
"The lack of evidence for student demand for foundation degrees is a concern but, at this stage, we are talking about relatively low numbers," said Bahram Bekhradnia, director of policy at the Higher Education Funding Council for England.
"It looks like there will be a lot of interest in providing the prototype foundation degree. What we need to know is whether or not they are just rebadged Higher National Diplomas."
The invitation to bid stated: "We want to support soundly based proposals for foundation degrees wherever we can. However, it is for each institution to decide, in the light of its own circumstances, whether to develop foundation degree programmes at this stage. We have no automatic presumption in favour of foundation degree bids."
The funding council will also provide more than Pounds 5 million to develop and deliver graduate apprenticeships, which tack work-based learning onto sub-degree, degree or postgraduate qualifications. It will allocate the graduate apprenticeship places and funding to institutions that can demonstrate the employability of their graduates and provision in areas of skills shortage.