Targets are to be imposed on universities to encourage them to recruit more students.
Four targets are being developed by the funding council. It wants to set goals to increase the proportion of young people in higher education; to boost the proportion of students from lower social groups; to raise the proportion of students from lower social groups at individual institutions; and to prevent students from dropping out.
Education secretary Estelle Morris asked the Higher Education Funding Council for England to develop targets in her annual letter to the funding council.
Under the heading student numbers, she wrote: "I expect the council to devise a mechanism of targets for the sector."
Referring to widening participation, she wrote: "We need to ensure fair access to higher education. That means reducing the wide variation in performance between institutions with respect to the council's three access performance indicators (school type, social class and postcode).
"I look to the council to agree demanding targets with institutions in receipt of funding to raise their proportion of state-school students to more than 80 per cent. I also look to the council to (develop) a target for fair access that applies to the sector as a whole."
The dropout target will be sector-wide and forms part of a long-term plan for retention that is being developed by the funding council.
A funding council spokesman said: "Hefce supports the government's challenging commitment to widening participation and has had a range of policies in place for several years to increase and widen participation. Hefce anticipates that the targets will be both ambitious and realistic."
But shadow education secretary Damian Green attacked the plan. He said:
"Universities are being bullied to meet a single government target regardless of the effect this will have on academic standards. There is a clear threat that money will be taken away from any university that does not kowtow to the government."
Geoff Layer, professor of lifelong learning at the University of Bradford, said: "Increasing and widening participation is welcome. Targets to help institutions to achieve it are welcome also. But they need to be reconciled with the funding available and recognise institutional diversity."
The funding council plans to consult universities and colleges over the targets.