The Welsh Assembly will seek the power to abolish higher education tuition fees if the review in Whitehall fails to scrap them, Rhodri Morgan, the assembly's first minister, said this week.
The assembly hopes to incorporate the abolition of fees into an education bill expected to be announced in the Queen's speech in November.
In an assembly debate on Tuesday over legislation being prepared, Mr Morgan said he was determined that Wales follow the recommendations of the Rees report on student hardship and scrap fees. The report has already led Wales to reintroduce grants.
But Mr Morgan hinted that a graduate tax might be considered to replace fees in Wales. "I have made it clear since 1997 that I am not in favour of student tuition fees and always thought a graduate tax a much better solution to the funding problem."
He said he was hopeful about the outcome of the Department for Education and Skills review. "But if its outcome goes the wrong way, we would continue to press for the abolition of tuition fees."
Mr Morgan's comments were welcomed by student leaders. The president of the National Union of Students, Owain James, called the news "a real step towards the end of student hardship in Wales". He said: "It also serves as yet another reminder to Whitehall that the current system, which has doubled the cost of going to university, has badly failed students."
Phil Willis, the Liberal Democrat education spokesman, said students' education could suffer if England was left as the only country where fees were charged.