The government is failing to encourage more young people from working class backgrounds to enter higher education, a new report published today reveals.

According to the National Audit Office the number of university entrants from the lower end of the social spectrum remained at the same level between 1993 and 1999 despite a concerted effort by ministers to lift participation rates.

The NAO identifies an early loss of interest in education, an inability to identify the benefits of entering higher education and obtaining financial support as the main barriers to entry.

The report, "Widening participation in higher education in England", also identified insufficient participation rates among the disabled. The study found that a disabled 18-year old was found to be 40 per cent less likely to enter university than an 18-year old without a disability.

However the report does find improvements in participation rates among women and ethnic minorities.The report welcomes the £200 million allocated by the government for widening participation, but expressed concern about whether the funds were being appropriately targeted.

Sir John Bourn, the head of the NAO, said: "More people than ever before are attending higher education institutions in England and achievement rates in higher education in England compare very favourably to other countries.

"There must not be any complacency, however. If we are to encourage wider participation and work towards meeting the national learning targets while at the same time maintaining academic standards, then it is all the more important to match students to the right courses and support them through to qualification."

Minister for higher education, Margaret Hodge, welcomed the report's findings.

"The report backs up the government's determination to widen participation and reinforces the importance of our Aimhigher campaign launched earlier this week to encourage more students especially from low income backgrounds to go into higher education. We are already looking at how to simplify and target effectively the current support available," she said.

"HEFCE will be asking universities to clearly show how they are widening access with the money we are giving them. Making year on year progress towards fair access and bearing down on rates of non-completion remain Government priorities. We continue to work closely with the Funding Council in both these areas. "

The shadow education minister, Alistair Burt, said that the report highlighted government weaknesses in higher education policy.

"It is time for ministers to stop lecturing Universities on this issue, falsely suggesting that they are opponents and not allies in a common cause," he said. "We will all benefit from wider participation and higher achievement, and it is time for government to welcome what all those who deliver Higher Education have been doing, acknowledge its own responsibilities, and change both attitude and response in light of these reports."

The NUS national president Owain James claimed that the report supported the case for a review on student funding.

"In the week when the prime minister re-iterated the need to review funding, this report is more damning evidence that the current system is not working, and ultimately, is depriving many students of the right to a university education," he said.

"The government cannot be in any doubt about the severity of this issue - NUS believes that maintenance support for students that really need it must be implemented urgently. If the government is serious about widening participation it needs to produce a package that not only encourages students to apply to university, but also supports them throughout their time there."

Diana Warwick, the head of Universities UK, welcomed many of the report's findings but said more had to be done to encourage students from poorer backgrounds.

"We are already building on existing work with other stakeholders in HE to facilitate access by non-traditional students, raise aspirations and improve awareness of the benefits of HE," she said. "In addition, Universities UK has already called for a simplified and improved system of financial support for the poorest students."

Sally Hunt, assistant general secretary of the Association of University Teachers, welcomed the report, but said it highlighted the need for more resources, and a review of student finance.

"This is yet another critical report on the government's record on reforming student access. While lecturers and academics welcome the government's commitment to expand student numbers it is now pay back time. Unless more resources can be found to help support the excellent work highlighted by the National Audit Office then universities will struggle to meet their participation targets," she said.

"The report demonstrates the genuine impact of student hardship on non-traditional learners. Successive governments have failed to meet the challenge of releasing the potential of a new generation of students. Surely, reform of student funding is long overdue?."