Tens of thousands of capable sixthformers will miss out on university places this year because record numbers of applicants and a government freeze on places have created a crisis in the higher education system.

Talks are under way with Lord Mandelson, the Skills Secretary, in the hopes that funding for an extra 10,000 places may be found. But university heads could veto the plan after they were told that they may not get extra money to teach the additional students.

Vice-chancellors warned that competition in the clearing system would be fierce and universities will be far less lenient on students who miss their grades this year. Ucas, the university admissions service, said that almost 600,000 had applied — a rise of nearly 10 per cent on last year. The biggest rises were among mature students, with a 22 per cent increase in applications from the over-25s, possibly motivated by a desire to acquire more skills during the recession.

However, ministers have capped degree course numbers and so 50,000 able applicants will miss out this September because there is no money to fund them. University applications closed at the end of June and figures showed an extra 52,204 people compared with last year were seeking the 408,000 places on offer. But only 3,000 extra full-time undergraduate places have been made available because of a £200 million budget deficit.

Professor Les Ebdon, the Vice-Chancellor of the University of Bedfordshire and chairman of Million+, a think-tank that works to solve problems in higher education, said: “If the Government could find £93 million per year more in student support, many universities would be able to offer these students places.”

Sixth-formers who miss their grades in August will face the toughest fight yet for places, as most courses are now full. The clearing system, in which students who miss their grades are given a second chance, is expected to have 60 per cent fewer places on offer than last year.

Only 16,000 may be available, Million+ said. Last summer 43,000 people found places through clearing. Diana Warwick, the chief executive of Universities UK, which represents the heads of UK universities, said clearing would be “briefer and tighter” than in previous years.

The Government has threatened universities with fines if they take on more students than they are allocated. Disproportionate numbers have applied to study nursing, engineering and tourism, suggesting that demand for vocational courses is on the rise. Wendy Piatt, the director-general of the Russell Group of research-intensive universities, said: “The clampdown on student numbers this year means it is likely that Russell Group universities may have to make fewer offers in oversubscribed courses, and students who miss out on their grades are less likely to be accepted than in previous years.”

Alistair Jarvis, from the 1994 Group of research intensive universities, said: “We would like to help meet this healthy demand for university places but would need additional funding to ensure the quality of the academic experience.”

The target to put 50 per cent of young people through higher education — a mantra of new Labour — now seems an impossibility. David Willetts, the Shadow Skills Secretary, accused ministers of sleepwalking into a crisis. “Young people are becoming the biggest victims of this recession. The number of young people not in education, employment or training is already at record levels, and now we are on course to have a record number of young people refused a university place.”

David Lammy, the Universities Minister, said students who achieved the right grades would secure a place, and that the Government was working to manage increased demand.

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