Universities will come under pressure from the new access regulator and a "competitive market" to increase the bursaries they offer to poor students, according to Charles Clarke.
The education secretary moved to ease concerns about the independence of the Office for Fair Access and predicted that universities would, of their own accord, increase bursaries above £300.
But Mr Clarke said Offa would have "teeth" and he hinted that he would use the secretary of state's reserve powers to intervene if it proved ineffectual.
As reported in last week's THES , a discussion document produced by Universities UK immediately after the higher education bill was published indicates concerns about the power Mr Clarke would hold over the regulator.
UUK also fears that Offa will leave universities open to litigation from rejected students while dictating admissions and the composition of the student body.
Mr Clarke said that he would retain reserve powers over Offa, as well as setting its frame of reference and nominating candidates for the post.
"The regulator will be very independent," he said. "The way that all of our quangos in Britain operate is that the government sets the frame of reference and then nominates the individuals. Now you can say that's not right. But there is plenty of evidence of people being independent when they are appointed to them; like the chief inspector of schools or the Qualifications and Curriculum Authority.
"We don't know how the Offa regime is going to work, so the secretary of state will have reserve powers, but the intention will be not to use them.
We want Offa to work. But we do want to make sure it really does have teeth."
Mr Clarke said he expected universities to be under pressure from a competitive market to increase the amount offered as a bursary to attract working-class applicants.
Universities such as Cambridge, Imperial, Exeter and Surrey had already moved to offer £4,000 bursaries, he added.
"Universities will come under pressure and they will want to do it themselves," Mr Clarke said. "I think there will become an almost competitive market in how much you can offer to encourage people."
UUK said that "some concerns" remained about Offa and that talks were continuing with the Department for Education and Skills.
A spokesman for UUK said: "Individual institutions are currently looking both at the fee levels they will charge and at their bursary provision. In addition, UUK is having discussions with the DFES about bursaries; these are at an early stage.
"The intention is to set up a UUK working group to look at this issue with the aim of facilitating local arrangements and ensuring that they are simple to understand and transparent for students."