Further cuts to the higher education budget may be necessary to address an emerging funding problem with tuition fees, MPs have said.
The Commons' influential public accounts committee found that the coalition government's plans to introduce a maximum tuition fee of £9,000 are proving a financial as well as a political liability.
Ministers had said the £9,000 fee was only to be used in exceptional circumstances. But of the 129 higher education institutions, over half have opted for the maximum on at least some of their courses.
MPs warned that cuts to the higher education budget or extra resources from the Treasury were the only options to cover the potential funding gap, which could total hundreds of millions of pounds.
"Having to provide student loans to meet this level of fee could create a funding gap of several hundred million pounds for the taxpayer," the report warned.
Committee chair Margaret Hodge said: "If the universities' plans to widen participation are approved by the Office for Fair Access, this will leave a substantial funding gap which will either require further cuts in higher education or further resources from the Treasury."
The Department for Business, Innovation and Skills said it would not know the full cost to the government until late next year when students had enrolled and received their loans.
"By 2014/15 we expect public support for universities could rise by ten per cent in cash terms, as institutions that attract students through high quality courses are given the ability to thrive," a spokesperson said.
"Under the new HE reforms we are putting students in the driving seat, rather than allocating funding though a central grant.
"Providing prospective students with clear, comparable information about what and how they will learn is a priority for our reforms."
"We recognise that the role and powers of HEFCE will need to change. We will set out proposals on which we will consult in the forthcoming HE white paper. "
The report said it was not yet clear whether higher fees would dampen student demand for places, however.
It found the "unprecedented change" being imposed would leave the Higher Education Funding Council for England (HEFCE) unable to influence the sector, because its funding role would be significantly reduced. A new system of regulation needs to be set up as a result, MPs said.
The Bis spokesperson added: "We recognise that the role and powers of HEFCE will need to change. We will set out proposals on which we will consult in the forthcoming higher education white paper."
The University and College Union (UCU) said it was stepping up its campaign to get universities to pass no confidence motions in higher education minister David Willetts.
Both Oxford and Cambridge universities are in the process of passing motions. Oxford dons will vote today, while over 130 academics at the University of Cambridge have submitted a motion to its sovereign body calling for a vote.
"By introducing a market and cutting institutions' budgets, the government is at risk of gambling away the future of our universities and our children's education," UCU general secretary Sally Hunt said.
"We will be encouraging our members at other institutions to hold similar votes to Oxford and Cambridge, so ministers get the message of just how unpopular their proposals are within the academic community."