By Ian Dunt
The prospect of a graduate tax to pay for university has finally been ruled out, with Vince Cable writing to his colleagues to say it was not going ahead.
The business secretary will pledge to Tory and Lib Dem MPs that he would ensure a 'progressive element' was added to any rise in fees.
The Conservatives are understood to be considering Lib Dem suggestions that would see higher earning graduates paying more interest on their student loans.
Lord Browne's review of university funding will be published on Tuesday, and it is expected to double the cap on fees to £7,000 a year. Top universities are keen to increase their fees and the charge is expected to shoot up as soon as it is allowed.
That presents an enormous problem for the Lib Dems, who rely extensively on student support in major cities.
Labour leader Ed Miliband jumped on the opportunity to cooperate with Lib Dem MPs who would fight a raise in tuition fees in the Commons.
"I'll work with anybody in the House of Commons who wants a progressive system of student finance," he said.
Shadow education secretary Andy Burnham came out strongly against the move this morning.
"I worry greatly that we might be about to build a university system that is out of reach for ordinary families," he told the Andrew Marr programme.
"I do not want to see a pure market in university education where the best universities can practically charge what they like."
The Liberal Youth group immediately said its supporters would lobby against any increase in fees and demanded Lib Dem MPs rebel against any effort to get a hike in fees through parliament.
Sir Menzies Campbell is also thought to be acutely opposed to such a move, with some sources suggesting his support for the coalition arrangement depends on it.
NUS president Aaron Porter said: "There is nothing fair about extending top-up fees further still and doubling tuition debt. It would be an insult to the intelligence of students and their families to attempt to re-brand the regressive and unpopular top-up fee system."
Despite the opposition, Dr Cable insisted a progressive element could be added to any fees increase.
"I am entirely committed to a progressive system of graduate contributions, the details of which we will be able to confirm shortly," he wrote in his letter.
"A 'pure' graduate tax - is not the way forward. While it is superficially attractive, an additional tax on graduates fails both the tests of fairness and deficit reduction."
Dr Cable made no secret of his support for a graduate tax, giving a speech extolling its virtues shortly after entering government. Conservatives have been less keen on the basis that it does nothing to reduce the deficit in the short term.