Revised population figures have given an unexpected boost to the government's pledge to get half of all 18 to 30-year-olds into higher education by 2010, allowing civil servants to lower the targets for additional students.
The Department for Education and Skills has confirmed that the sector needs to recruit 250,000 additional students over the nine years from 2001-02 to 2010-11 - rather than the 400,000 initially estimated for the 11 years from 1999-2000.
"Following the 2001 census, we now know that the population is significantly lower than previously thought," a DFES spokesman said. That, in conjunction with a rise in university acceptances in 2001-02, means that "the higher education participation rate is higher than previously thought - so we are closer to the 50 per cent target", he said.
The DFES said the census results led the registrar general to revise his estimates of the entire population downwards by about 1 million. The estimated higher education participation rate is now 43 per cent for 2001-02, rather than 41 per cent as previously thought.
The spokesman said the DFES was also very encouraged by the growth in the student population between 1998-99 and 2001-02. An average of 25,000 additional students has entered higher education in each of the years from 1998-99. Under the DFES's revised target, just under 28,000 extra students would be needed in each of the next nine years.
Baroness Warwick, chief executive of Universities UK, said the new targets did not affect UUK's claim for £15 billion to meet expansion targets while protecting infrastructure and standards.
Higher education minister Margaret Hodge said this week that many of the extra students needed to hit the target would be studying two-year, vocationally orientated foundation degrees.
At an Institute of Public Policy Research seminar, Ms Hodge said, in advance of next Wednesday's higher education strategy document, that some universities would specialise in vocational and foundation degrees while others would continue to deliver traditional honours degree courses.
She said that "Mickey Mouse" courses would vanish as students refused to spend money on them. She defined such courses as those that were not as rigorous as expected and that led to a degree that might have little relevance to the employment market.
Earlier she said: "We intend to stop them (Mickey Mouse courses) breeding. Once you have published far more data about the nature of courses, how they help you get a job and are asking students to contribute (more) towards the cost of courses, I think students themselves will ensure that what is offered by universities not just meets their aspirations but also meets labour market needs."
Government sources have said that a switch to top-up fees of £3,000 to £4,000 a year would be part of an integrated support package that includes maintenance allowances for the poorest. This could mean universities having to borrow to meet a shortfall of up to £10 billion between now and 2006.
The strategy paper will set out policy for a new charging system, but there will be wide consultation on some proposals relating to student support.
Students paying higher fees will be recast as consumers and universities as retailers in a higher education market. Undergraduates will be expected to use their economic muscle to underpin course quality and drive institutional diversification.
Student demand is expected to force universities, working with further and higher education colleges, to diversify and provide more vocational courses.
Those universities delivering traditional degrees will expand more slowly and continue to be funded well for research. Those taking a more vocational route will expand faster, recruiting in particular more students from poor backgrounds, and will get less public funding for research.
Diversity will be cemented further by harnessing universities financially and organisationally to their regional economies. This will have a disproportionate impact on universities teaching vocational skills. Top research universities will pursue national and international agendas.
Education secretary Charles Clarke has told leaders of the Standing Conference of Principals to be prepared for changes that could give their institutions more rewards for teaching and widening participation, but no funding for research that is anything less than the best.
Scop leaders hope to gain taught degree-awarding powers through a fast-track scheme. About three-quarters of colleges have yet to complete the process of gaining taught powers, which takes 18 months to two years.