Australian universities will be barred from imposing compulsory service fees on their students from July of next year.
Academic and student groups say 4,000 jobs would be lost as student services including childcare, careers and employment advice as well as personal, housing and financial counselling are shut.
A last-minute decision by Steven Fielding, an independent Senator, to back the legislation allowed the Voluntary Student Unionism Bill to pass by one vote before parliament closed for summer recess.
The National Tertiary Education Union said Australia would become the only Organisation for Economic Co-operation and Development country that prohibited the collection of fees to support extracurricular campus activities.
"Virtually every university worth its name in the Commonwealth, US and Western Europe provides for a collection of a fee for such purposes," said Andrew Nette, NTEU policy and research co-ordinator.
"The Government has rushed through legislation on the last parliamentary sitting day of the year for the sake of fulfilling an ideological obsession that has nothing to do with students' welfare."
Brendan Nelson, the federal Education Minister, had planned to have the ban in place from the start of the new academic year next February. But with the prospect of the legislation not passing the Senate, it was put back to second semester in 2006.
Universities will be subject to multimillion-dollar fines if they force students to pay fees. The legislation has been condemned by vice-chancellors, academics, students, the opposition Labor Party and many of Australia's sporting champions. The Australian Vice-chancellors'
Committee warned that most of the services students now enjoyed would disappear if the act was passed.
Fearing that the legislation might not get the support to pass both houses of parliament, Dr Nelson offered an alternative: a ballot to be held on every campus to allow Australia's 660,000 students to vote in support or against paying non-academic fees.
The proposal was widely derided and, in a final compromise that apparently won the support of Senator Fielding, Dr Nelson offered to provide special grants to universities to make up some of the shortfall.
But the grants are likely to cover only half of the A$160 million (£68.6 million) presently collected in student fees. The additional money may only be guaranteed for three years.