Plans to scrap traditional degree classifications were bolstered this week by figures showing a record increase in the number of first and upper-second class degrees awarded.
Provisional figures showed that the proportion of students gaining the top degree classifications increased from 53 per cent in 2001 to 55 per cent last year - with 10 per cent now gaining firsts.
Employers warned that "grade inflation" was undermining the higher education system and preventing them from identifying the most talented graduates.
Ruth Lea, head of policy at the Institute of Directors, said: "When I was a girl, getting a 2.1 was very coveted, and a first was truly exceptional - but are the 10 per cent now getting firsts really all so exceptional? No."
Ministers want to encourage universities to abandon degree classifications in favour of a US-style points system, which would provide finer divisions. The issue is likely to be addressed in the strategy paper on higher education.
The Higher Education Statistics Agency figures showed that 9.7 per cent (26,100) of the 267,100 first-degree students who graduated last year gained firsts, compared with 8.9 per cent (23,700) the previous year. Some 44.7 per cent (119,500) earned upper seconds, compared with 43.9 per cent (116,600) in 2001.
The data highlighted the size of the task of fulfiling the pledge to get 50 per cent of under 30s into higher education by 2010. While 8 per cent more students completed sub-degree courses, there was a 0.6 per cent increase in first-degree graduates to 267,100. The Association of University Teachers said the figures "cast a great deal of doubt as to whether the 50 per cent target can be achieved".
A spokesman for the Department of Education and Skills said this was unfounded as the figures related to graduates rather than first-time entrants.