But universities will be able to charge the £9,000 top rate only if they agree to fund more undergraduates from poorer families

Elite universities welcomed the government's plans today to raise tuition fees to £9,000, almost three times the current level, if colleges agree to increase scholarships intended to ensure that the poorest are not priced out of a degree.

The universities minister, David Willetts, announced proposals for what he described as "progressive" reforms to raise the "basic threshold" for tuition fees from the current £3,290 a year to £6,000.

Institutions will be able to charge up to £9,000 only in "exceptional circumstances" and only if they agree to much tougher targets to fund undergraduates from poorer families.

The elite Russell Group of universities welcomed the plans, though the Million+ group of new universities said it was "unlikely" that the proposals would sustain university funding in the long-term and expressed concerns over social mobility. The National Union of Students attacked what it described as an "ideological move" to transfer the costs of university education away from the state, and the British Medical Association warned it could have a devastating impact on young people from poorer backgrounds who aspire to be doctors. Labour said the fee rises were "a tragedy for young people".

Many Lib Dems are still wavering over the move – since they have all signed a pre-election pledge with the NUS promising not to support any rise in fees. A senior coalition source said tonight there was "Lib Dem blood sweat and tears all over this" – though some Lib Dems planning to vote against the legislation admitted it was "more progressive" than they feared.

Graduates will pay a contribution towards the cost of their degrees once their earnings have risen above £21,000 a year, repaying 9% of their income above this level. A quarter of graduates will pay less overall than they do at present under the new proposals. Ministers gave the example of a graduate earning £30,000 who will pay back £15.58 a week.

There will be a penalty on early repayment for the highest earners. "It is important that those on the highest incomes are not able to buy themselves out of this system," Willetts said.

The plans follow sharp cuts to higher education teaching budgets in the spending review last month.

The Lib Dem deputy leader, Simon Hughes, asked Willetts which students would be better off financially than under the current system. Willetts said the increase in maintenance grant would benefit around half a million people.

Hughes said the proposals were an improvement on Lord Browne's plan published last month, but would not say whether he would vote to support this increase in fees. Former Lib Dem leader Charles Kennedy, however, told Willetts and the business secretary, Vince Cable, that he was not prepared to "go along with this particular direction of travel". The junior home office minister Lynne Featherstone, meanwhile, wrote on her blog that she had still not made up her mind.

In a speech to Microsoft government leader's forum tomorrow, Nick Clegg, the deputy prime minister, will set out ways in which the package is one the Lib Dems can accept, highlighting students who will repay less per month under than they currently pay, detailing the £150m for a new National Scholarship Programme and tough new sanctions of universities who fail to improve access to poorer students.

But today Aaron Porter, the NUS president, said the plans would "force students to shoulder the bill for devastating cuts to teaching".

David Barclay, president of Oxford university student union, who was one of seven student leaders invited to meet Clegg today, said: "It's not impossible to imagine a situation where a graduate going to an interview is asked, did you go to a 'cap 6' university or a 'cap 9' university?"

How the increase in student fees will bite

What is the government proposing?

Ministers want to allow universities to raise their fees – capped at £3,290 – to £6,000, and in "exceptional circumstances" up to £9,000 from 2012. Students will still not have to pay fees up front. Instead, they take out loans and pay them back when they graduate and are earning £21,000 or more. At the moment, graduates start repaying when they are earning £15,000. Ministers want part-time students to be able to take out loans as well. At the moment, they have to pay up at the start of their courses. Interest rates could also change; ministers want to charge 9% of income (RPI plus 3%) instead of no real rate of interest.

How is this different?

At the moment, almost all universities charge the maximum of £3,290 a year so there is no market in fees. There could be different fees for different courses within a single university.

What happens to students in Wales and Scotland?

These proposals affect only English universities. Scottish and EU students studying in Scotland do not have to pay any fees. Students from the rest of the UK studying there pay £1,820 per year. In Northern Ireland and Wales, fees are a maximum of £3,290. However, if the fees charged by English universities are much lower than those charged in Wales and Scotland, universities there could fall behind English institutions.

What happened to Lord Browne's proposals?

Lord Browne's review, published last month, proposed a free market under which universities could charge the fees they thought they could command. He suggested a levy on fees over £6,000 to stop some institutions charging prohibitively. The idea of unlimited fees and a levy have been scrapped. The coalition has adopted some of Browne's proposals, including the £21,000 threshold and parity for part-time students .

How much will universities charge?

It will depend and they will have to decide this quickly – their prospectuses for 2012 are published in April. Most will charge £7,000 to £8,000. Ministers think many will charge £6,000 by reducing their courses to two years. Some – mainly the former polytechnics – will not charge as much as £8,000 because they believe their students would be put off by the likely heavy debt.

What do the universities think ?

The most sought after, research-intensive universities say that the government's plans provide "a life-saving cash transfusion". Under the plans, universities – particularly Oxbridge – will have to do much more to encourage poor students to apply. Those that charge more than £6,000 will be subject to "much tougher" rules on access. They will need to show the regulator – the Office for Fair Access – that they are encouraging students from the poorest families and from under-represented ethnic minorities to apply. The regulator could fine them if they are not widening their pool of applicants. But the top universities say they already make serious efforts to attract students from deprived homes; higher education is seen as an asset to an individual, rather than to society.

What do students say?

The National Union of Students say the plans are an "unprecedented ideological move that will push all of the costs of higher education onto the shoulders of students who already face much of the financial consequence of the economic downturn".

Is this going to stop poor students from going to university?

Students may be put off by the thought of having to pay back a lot more. But the government insists that a quarter will pay less back than they do now over the course of their lives. Monthly rates will be lower because the annual income required to trigger repayments will be higher – up to £21,000 from £15,000. There will also be £150m available in national scholarships to cover the first year of university for students who are very bright, but poor.

What evidence is there that students from poor homes are put off applying to university if fees go up?

The Office for Fair Access – the admissions regulator – found a widening gap between rich and poor at the most selective universities, but says there is no evidence that this has worsened since top-up fees were introduced in 2006. However, research by Leicester University suggests many students would be deterred if they were charged £7,000. Some campuses would see a "potentially disastrous drop" in numbers.

Will the plans get through?

Highly likely. The government can withstand as many as 42 MPs voting against it. The Lib Dems have only 57 MPs; of those, some 26 are either ministers or have some kind of role with Nick Clegg which would require them to vote with the government. However, some ministers and whips may decide to go with their pre-election pledge not to support any increase in fees rather than toe their party line.