Gordon Brown quashed fears that universities would be expanded on the cheap this week by confirming that the government will fully fund rising student numbers until 2008.
In Wednesday's budget speech, the chancellor declared for the first time that public spending per student would be maintained in real terms, appearing to rule out the threat that income from top-up fees from 2006 would be clawed back for other uses.
The announcement will ensure that universities and colleges will not have to spread resources more thinly as they recruit more students to meet the government's target of attracting half of 18-to-30-year-olds into higher education by 2010.
In a surprise move, Mr Brown announced the outcome of the spending review for education some four months before it was due to conclude, in July.
Overall, the education budget for England will rise to £64 billion by 2007-08, amounting to an average 4.4 per cent real-terms rise a year for three years.
Mr Brown told the Commons that university and student finance reforms "will be matched by rising real-terms funding to progress towards the 50 per cent target for students in higher education".
He said: "The settlement will ensure universities receive in full the benefit of additional revenue from the government's higher education reforms."
Charles Clarke, the education secretary, was due to make a statement to the Commons on Thursday after The Times Higher had gone to press.
A source at the Department for Education and Skills said: "We are delighted that the chancellor has given a firm guarantee to back up what we have been saying all along. We were not asking students to pay more so we could pay less."
The sector had feared that the amount of state cash per student would decline as private contributions through top-up fees increased. This happened after flat-rate tuition fees were introduced in 1998.
Universities UK said: "This will help ensure that income from the proposals for variable graduate contributions remain truly additional."
The chancellor also underlined his commitment to a long-term investment in science in the budget.
He announced a ten-year framework for medical science, including the establishment of a clinical research network and specialist institutes for disease research.
The health research budget will increase from £1 billion to £1.2 billion by 2008. No definite figures for the overall investment in science will be released before the spending review, but the Treasury indicated that there would be a higher than real-terms increase between 2006 and 2008.
The commitment has not assuaged concerns that the research councils will be unable to fund new areas of research in the short term.
David Wallace, vice-chancellor of Loughborough University and president of the Institute of Physics, said: "My instinct would be that for this spending review there may be more money for sustainability, but I wouldn't expect significant funding to increase the volume of research."
Research council insiders estimate that to sustain the government's previous research investment there would need to be an increase of about 10 per cent for science this summer.
BUDGET AT A GLANCE
- The UK's education budget will rise from £59 billion this year and £63 billion next year, to £72 billion in 2006-07 and £77 billion by 2007-08
- Staffing at DFES headquarters in London will be cut by 31 per cent by 2008
- A "ten-year framework" for medical science including funding for specialist research institutes and a new National Clinical Research Network that will draw together public and private sectors with medical charities
- The research budget in the NHS to reach £1.2 billion a year by 2008
- Science funding raised as a share of national income.