Image caption The transition from public funding to higher tuition fees is beginning to take effect in universities

Most universities in England are going to have fewer places to offer students this year, as the funding changes in higher education are implemented.

The Higher Education Funding Council for England suggests that about three out of four universities could reduce places - some by more than 10%.

But there will be an increase in degree courses in further education colleges.

Universities Minister David Willetts said there would be more choice in this "student-focused" reform.

In separate figures published on Wednesday, the proportion of young people participating in higher education stalled at 47% - the first time in recent years that the number has not risen.

Funding switch

The funding council's announcement marks another significant milestone in the major changes to higher education funding and a more market-driven approach to places.

The tuition fee increases - up to £9,000 per year - will replace the public funding that is being withdrawn.

Far from giving the best universities freedom to take on more students, this represents a push to a cut-price education Professor Michael Farthing, 1994 Group

The next phase of this reduction will see the teaching grant cut by more than £800m for 2012-13, with a further $1bn being cut the following year.

For 2012, it will mean about £3.8bn in teaching funding. There will also be £1.6bn for research.

Funding council chief executive Sir Alan Langlands said this was a transition towards "fundamental changes" in higher education, with a "switch in the balance of funding from public to private".

The wide range of levels of funding for teaching and research is also revealed for individual institutions.

Oxford, with about £178m, and University College London, with £174m, are the biggest recipients. A number of smaller institutions will receive less than £10m each in such recurrent grants.

Competing for places

This will also mark the introduction of changes in the allocation of places.

After a bidding process, about 10,000 degree places will be offered through further education colleges rather than universities.

Although the central grant is falling, more money will reach institutions as resources follow the decisions made by students David Willetts, Universities Minister

There will be an overall drop of about 11,000 places, which also includes the withdrawal of a temporary increase in student numbers.

Another unknown factor in places will be the removal of limits on recruiting students gaining high A-level grades of AAB or above.

The projected changes mean that a substantial majority of universities will have fewer places next year - and about a quarter of universities could face reductions of 10% and above.

Sir Alan said that all such institutions could "cope with the change" and would be able to "ride it out financially".

The Russell Group of leading universities, responding to the funding announcement, called for a higher level of teaching grant support for expensive science subjects.

It also called for even more flexibility in student numbers for the most able applicants - suggesting that there should be no control over numbers for those achieving ABB grades.

Market forces

Michael Farthing, chairman of the 1994 Group, attacked the way places were being allocated.

"The number of students universities are allowed to recruit has been cut across the sector, with 20,000 places auctioned off to institutions with lower than average fees.

"Far from giving the best universities freedom to take on more students this represents a push to a cut-price education," said Professor Farthing.

Michael Driscoll, chair of the Million+ group, warned that the combination of reduced funding and number controls would mean an "overwhelming majority of universities losing student places".

"We are now in a bizarre situation that excellent universities will find it more difficult to innovate and respond to new and emerging areas," he said.

Liam Burns, president of the National Union of Students, said that "marketising" higher education had promised more choice, but had caused "slashed budgets, bigger debts and thousands fewer places".

Universities Minister David Willetts defended the changes - arguing that funding for students and universities would increase by 10% during this parliament.

"Although the central grant is falling, more money will reach institutions as resources follow the decisions made by students," he said.

"We want a student-focused higher education sector, more choice over where to study and a renewed focus on the quality of the student experience.

"That's why we're freeing up centralised number controls, improving information for prospective students and driving a new focus on the academic experience."