Further education colleges will be able to run and price degree courses without the consent of local universities under arrangements agreed by the Department for Education and Skills and the Quality Assurance Agency.
In a move that could usher in a US-style two-tier higher education system, colleges will be able to offer foundation degrees using a validation service created by the Universities Vocational Awards Council.
Uvac's National Validation Consortium will act like a national awarding body, similar to the former Council for National Academic Awards, without having to go through the process of gaining degree-awarding powers.
Students at colleges using the consortium would graduate with degrees carrying the name of several Uvac member institutions. Uvac also hopes that commercial companies will want to use the service to validate higher level in-house and block-release training.
David Melville, Uvac chairman and Kent University vice-chancellor, said the consortium would be able to award and validate degrees as a "collective of institutions", charging a standardised fee for the service.
He said: "It was a question of whether an institution could delegate the validating and awarding of its degrees to a group of representative institutions as long as appropriate controls were in place.
"We have taken legal advice on this, and the department has agreed that we can go ahead."
The QAA, which backs the plan on condition that all lines of quality assurance and accountability are cleared with participating Uvac members, may assess the consortium as a single body.
Professor Melville said: "This model allows various combinations, but it's not a set of ad hoc arrangements. Everything will be under the aegis of the National Validation Consortium, which is potentially providing a means of creating a national awarding body that is in essence a collective of institutions."
The consortium's first customer may be the awarding body Edexcel, which was forced to put its plans for national Btec foundation degrees on ice last year when partner universities pulled out amid fears that they would fall foul of QAA franchising rules.
Edexcel told The Times Higher that it was "still discussing the details" of using the validation service.
Uvac has yet to decide what fees it will charge clients or to discover how many of its 80 member institutions want to join the consortium. Decisions are expected to be made after its board meeting on March 15.