Ministers have reversed plans for a freeze on student places next year to forge ahead with the expansion of foundation degrees, which are expected to attract 50,000 students by 2006.
Ten thousand extra foundation-degree places are up for grabs by universities and colleges next year, backed by £14.5 million of government cash. The Higher Education Funding Council for England will seek bids next month.
The change follows warnings that the qualification is suffering from "planning blight" and evidence that employers want graduates with foundation degree-level qualifications.
The bidding round and a £6 million promotion will be announced in a "prospectus" to be published by a government-backed task force on October 7. A total of £8.5 million, beginning with £2.5 million this academic year, will also be made available to develop foundation degrees.
The prospectus will say that the extra funding, together with a programme led by awarding body Edexcel to convert higher national diplomas into foundation degrees, should help raise the number of places to about 50,000 within three years.
A study published this week by the Higher Education Policy Institute said employers reported a skills gap in the "intermediate" jobs category. Libby Aston, who conducted the study with HEPI director Bahram Bekhradnia, said:
"It does seem possible that an increased number of graduates, especially at the sub-degree level, might provide a solution to meeting this skills gap."
Last year, there were 12,000 foundation-degree students. Latest figures from the Universities and Colleges Admissions Service show that 641 new courses started this year, and the number of people applying for places on full-time foundation degree courses rose by 118 per cent. But 218 courses have been discontinued, a sign of the problems some institutions have had in getting the qualification off the ground.
Margaret Lawson, foundation degrees officer for the Association of Colleges, said: "It was a pretty short timescale for some foundation degrees. They were started with the best of intentions, but not always with all the characteristics they were supposed to have. Some have slid off the scale and won't be offered again."
A Hefce-commissioned interim evaluation report on the progress of foundation degrees identifies lack of funding, patchy employer awareness and variable student progress as the key issues and potential stumbling blocks.
The authors, David Robertson, head of policy development at Liverpool John Moores University, and Mantz Yorke, professor of education at LJM, say that while the foundation degree "thrives", recruitment has been "very variable" and it is too early to be certain that it will flourish.
Institutions have been inclined to set fees for foundation degrees above those for HNDs because their costs exceed Hefce's provision, the report says. It notes that employer awareness of foundation degrees varies greatly: some are sceptical about them and prefer qualifications such as HNDs.
Most institutions have arrangements for foundation-degree students to progress to a full honours degree, but it is too early to say whether their predicted progression rates, which range from 40 per cent to 90 per cent, will be realised, the report says.
Institutions contacted by The THES said lack of policy direction, publicity and information on foundation degrees had harmed recruitment efforts.
Russell Moseley, director of Warwick University's Centre of Lifelong Learning, said they were "suffering from planning blight".
He said: "Until we get a firm view about what is happening at a national policy level on foundation degrees and the future of HNDs, everyone will just be waiting to see what happens."
Edexcel, which has been working with the Quality Assurance Agency on its HND conversion scheme, expects that 20,000 HND places will be rebadged as foundation-degree places by 2006. Institutions offering HNDs will be asked to convert them to their own foundation degrees or move them to a new BTEC foundation degree to be offered by Edexcel.
Results of a comparison of the costs of foundation degrees and part-time and distance-learning courses were published this week. JM Consulting found that some foundation-degree courses cost half as much again to provide each year as those subjects would have cost at degree level because of the expense of maintaining employer and college partnerships.