The Cardiff assembly is to be given powers over university top-up fees, the Welsh secretary has announced.

Peter Hain said that agreement had been reached following discussions between the assembly administration and education secretary Charles Clarke.

The move has been long expected, having been initially leaked to the press when Clarke published his higher education white paper in January.

Welsh Labour hailed the move, saying it would allow the party to keep its election commitment not to introduce top-up fees during the current four year term of the assembly.

It will also boost the party's case that the powers of the Cardiff Bay assembly do not need a radical overhaul.

In a submission to the independent commission, which is examining the functioning of the assembly, the party indicated a preference for incremental change in cases where an extension of the assembly's powers was justified.

Hain said the move would end the anomaly whereby the National Assembly for Wales has responsibility for higher education institutions but not higher education students.

The assembly will take responsibility for student funding for higher and further education students domiciled in Wales, and full responsibility for the tuition fee regime, including powers over variable fees.

It is expected that the new powers will be in place for the academic year beginning September 2006.

Powers to collect repayment of student loans from graduates through the tax system will continue to remain a UK government responsibility.

"I have been in detailed discussions with Charles Clarke, and the assembly minister for education and lifelong learning, Jane Davidson, on the principles underpinning this transfer and on the means for achieving it," said Hain.

"Our officials will continue to work on taking forward these proposals over the summer and I hope that further details will be available later in the year."

Davidson said the move would allow the assembly government to build on its commitment to widening access to further and higher education in Wales.

"While other parties play silly games with our assembly, we are getting on with the job of creating a healthier, wealthier, smarter Wales," she added.