Representatives of Britain's universities have backed calls by the NUS for the government to act on the problem of student debt.

Professor Roderick Floud of Universities UK, the body which represents Britain's university sector, has told the government there is a "growing consensus across all parts of higher education" that student hardship is hitting the ability of students to get the most out of university.

Speaking to a National Union of Students rally in London on Saturday, Floud said: "It simply isn't possible for a student to gain the most from a university course if they are working some 20 hours a week in addition to their studies."

Pointing to ministerial admissions that the present system is a "nightmare", Floud called for a simpler system of student support targeted at those in greatest need.

The NUS demonstration is part its wider "grants not fees" campaign, which has already seen demonstrations held in Nottingham and Birmingham, with future protests planned for cities including Bristol, Plymouth and Liverpool over coming weeks.

The students' union wants the government to end student hardship and debt with the abolition of tuition fees and the introduction of targeted maintenance support.

NUS president Owain James said students are working longer hours in paid work to try to keep their debts down with a detrimental effect on their grades, but still have debts of over £12,000 on graduation.

The government has set up an inquiry into student finances following worries that the policy of tuition fees and student loans cost them votes at the last general election. The government is also worried that fear of debt will stop the government reaching its target of 50 per cent of people in higher education by 2010.

The Universities UK chief said the NUS had done a lot of work to highlight the issue of student hardship.

"But the important point that I think this highlights is that there was a clear consensus across higher education, from vice-chancellors, through university teachers to students themselves - and we're all saying that there's a real problem here," said Floud.

But he warned that funding for students should not come at the expense of universities. "We must work together to ensure that the case for institutional funding takes its place alongside the case for student funding in the government's forthcoming spending review," he said.

The government review is being overseen by Andrew Adonis, Tony Blair's education adviser, and includes Treasury and education ministers.

The inquiry is reported to be considering charging market interest rates on loans, and redirecting the estimated £300 million that could be released into an improved bursary scheme for students from disadvantaged homes. The inquiry may also recommend that the different methods of helping students be consolidated into a smaller number of schemes.

Owain James said: "While we welcome the government's review of student funding, we are deeply concerned about recent media speculation over alternative systems which NUS believe will leave thousands of students even worse off. We urge the government not to waste this opportunity to put in new money and make genuine improvements for all students in further and higher education."

Also addressing the rally, Natalie Fenton, the president of the Association of University Teachers, said both students and lecturers are now united in demanding an end to up-front tuition fees and the re-introduction of a targeted grant.

"The current review into student funding offers the government the chance to put in place the long term measures necessary to end the scandal of student hardship and achieve the 50 per cent participation target," she said.

"Hard up students are turning up to classes exhausted from long hours working in pubs and clubs ready to face a de-moralised teaching force already stretched by increasing workloads and declining pay. Higher education is at a crossroads - the government must now choose between success or failure," she added.