According to the Daily Telegraph, the bill, which would have introduced major regulatory reform including new legislation making it easier for private providers to enter the market, is now unlikely be published before 2015.
The paper quotes an unnamed Whitehall source as saying: “The Liberal Democrats were increasingly opposed to further reforms to universities after the recent decision to increase fees.
"But David Cameron was also unimpressed by the recommendations so the whole thing is now off the table.”
David Willetts, the universities and science minister, told the paper: “There’s going to be a further discussion in Cabinet in the next couple of weeks. There’s no final decision either way yet.”
The Telegraph says that the intervention by Mr Cameron was the result not only of disquiet among his Liberal Democrat colleagues, but a lack of appetite for further controversial reforms of public services following the bruising battle over the restructuring of the NHS.
If the claims prove accurate, it would be a victory for the growing number of academics who have voiced their opposition to the plans for greater private sector involvement in higher education.
The University and College Union and National Union of Students have also fought hard against the proposals.
However, many of the other reforms that have already been implemented, such as the increase in the tuition fee cap to £9,000 this autumn and the ‘core and margin’ and AAB plans, which will see student places removed from general allocations and thrown open to competitive bids, will not be affected.
Pam Tatlow, chief executive of Million+, said: “Any delay to the HE bill will be welcomed by many universities.
“The extension of university title to private providers and non-teaching organisations was always going to be contentious and risks undermining the reputation of UK higher education and our ability to trade internationally.
“In reality the government has already introduced a number of measures which incentivise the market in higher education."
Liam Burns, president of the National Union of Students, said a long delay in the bill would merely allow the government to avoid parliamentary scrutiny.
“By hiking tuition fees and then failing to adequately provide protection ministers have made students the victims of a legislative hit and run,” he said.
“The government must come clean now on what changes they have planned for higher education and not leave it until after the next election to clean up the mess their car crash policy making has made.”
Mr Burns added: “Having lost the battle of public opinion over the trebling of tuition fees, the government is clearly not up for another public battle on its plans to sell off our education and will look to do it in private and under the radar instead.
“We must not be fooled into thinking our universities are safe from further attack, as many planned reforms could now be pushed through by ministers without the parliamentary debate that could have secured crucial safeguards.”
Shabana Mahmood, the shadow higher education minister, said the reports that the higher education bill has been dropped “show how ministers have lost any grip on their botched policy agenda”.
She added: “David Willetts needs to explain to universities and to parliament what is happening so they can plan for the future and continue the excellent work that they do.
“First with the White Paper and now the higher education bill, ministers have repeatedly delayed announcements, creating unnecessary chaos and confusion for universities and students alike.”
Sally Hunt, general secretary of the University and College Union which has led much of the opposition to the reforms, said “Plans to allow private companies greater access to taxpayers’ money would have seen them getting rich at the expense of the UK taxpayer.
“In the US for-profit universities and colleges have been investigated for the mis-selling of qualifications to vulnerable students and their families.
“That is the last thing we needed here as students struggle to adept to the new fees regime.
“The government should be applauded to appearing to listen to the experts in the case.
“We will continue to expose the dangers of allowing those whose first priority is to their shareholders a greater hold on our higher education system.”
Has David Cameron balked at the prospect of an “NHS moment”?
The proposed reforms to healthcare and higher education both centre on the idea of “any willing provider”.
Under the plans for the NHS, primary care trusts could be able to choose whether they use taxpayers’ money to commission clinical services from state-run hospitals or specialist private providers.
In theory, competition from private clinics should lead to more innovation, diversity of supply, efficiency and lower costs.
But fears have been voiced over the ‘cherry picking’ of low-cost procedures, with complex cases involving the long-term sick left to the state.
Without these ‘easy wins’, local hospitals would struggle to cross-subsidise more costly, unpredictable areas of care, such as A&E or maternity departments.
Facing year-on-year deficits, some hospitals might be forced to close, it is argued, leaving patients dependent on private providers which could withdraw from the market.
Introducing competition into higher education could cause similar problems, critics have claimed. With private providers hoovering up subjects that are cheap to deliver but which students are willing to pay for, such as business and law, universities would lose their ability to cross-subsidise other activities, it is argued. Such a shift could also reduce the critical mass needed to run a university effectively.
Meanwhile, profits fuelled by students with access to heavily-subsidised loans would be funnelled into the hands of private shareholders. There are also concerns that if providers left the market, those holding their degrees would be left with a certificate from a tainted university, while current students would face difficulties completing their studies.