Charles Clarke has told MPs that the outcome of the top-up fees debate will be "real and substantial" for higher education in Britain.

Addressing a packed House of Commons, the education secretary said the plans would increase funding, widen access and improve student support.

Clarke said the government had a "duty" to address the problem of cash shortages.

While higher education spending had risen over recent years this was not a trend that could be guaranteed to continue, he warned MPs.

"We cannot continue to rely on the taxpayer alone to resolve these problems. There will always be strong and competing demands for these resources," he said.

Pointing to figures showing that graduates earn around 50 per cent more than those without degrees, Clarke said it was "fair" to ask for individual contributions to higher education funding.

One Labour backbencher, Llew Smith, expressed his anger that money was available to fund war with Iraq but not to support university funding.

But Clarke said this was a "false choice" and that the government was required to defend national security.

The education secretary also said the proposed legislation would tackle class differentials in access to university.

"We must take the opportunity of this bill to ensure that the appalling obscenity of this deep class difference in who goes into our universities is addressed and attacked, and that is what the Office of Fair Access is about," he said.

Clarke said the governments plans would eliminate the existing "barrier" of the upfront fees.

"The only way to get rid of upfront fees is to vote for the Bill today," he added.

Students from poorer families would also benefit from a £3,000 package of support, with large bursaries being introduced by many leading universities.

Former Conservative education secretary Kenneth Clarke said that while students from the richest families would be supported by their families and those from the poorest families would gain from increased support, the "ordinary students from the ordinary family... will carry the burden of tens of thousands of pounds worth of debt in the years after they graduate".

But the education secretary said the up-front fee would be abolished, the threshold at which repayment begins will rise from £10,000 per year to £15,000, and a 25 year cap on debt repayments will be introduced for all.

If the Tory MP voted against the Bill, "ordinary students in his constituency will find themselves in a far worse position than they otherwise would be" said the Cabinet minister.

On the issue of variable fees, which is the key sticking point for many Labour MPs, Clarke said he did not expect their introduction to deter students from courses in better universities.

There will also be a report on how the reforms to university funding impact on access to key professions.

For the Conservatives, shadow education secretary Tim Yeo accused the government of moving the goal posts during its negotiations with backbenchers.

Yeo claimed the government had behaved in a disreputable way having broken its manifesto pledge not to introduce top-up fees.

"This bill is deeply flawed and we are opposed to it because it attacks the independence of universities and damages students," he said.

"For every vice chancellor that supports this bill, there are thousands of students that oppose this bill."

"It creates a new regulatory structure which removes for the first time, the freedom of universities to decide which students they should admit," he said.

Yeo claimed that the government's figures did not add up and that universities would find themselves short-changed.

"They will find the extra money as hard to lay their hands on as weapons of mass destruction in the Iraqi desert," he said.

"They [ministers] have tried to persuade vice chancellors that this bill meets their needs. It does not do so."

Yeo also attacked the plans for an access regulator which is crucial to the government's plans.

"Instead of selecting students on the basis of academic merit and potential, in future universities will have to reflect the prejudices of ministers. The regulator is a creature of the secretary of state," he said.

Liberal Democrat spokesman Phil Willis expressed his anger at the position of Labour ministers and MPs who were set to "break their promise to the people of Britain" by introducing top-up fees.

He said the legislation was "a Thatcherite policy in direct opposition to what they said in the last general election".

"It is bad for students, bad for parents, bad for lecturers and bad for universities," he said.

Willis added that the policy heralded a shift in government thinking towards charging for all public services.

"This is stage one of a shift that will see a greater responsibility [for] the payment of childcare, transport and social care [move] from general taxation to the individual," he said.

And he asked whether the Bill would in fact provide the money necessary to fund universities to a world class level.

"The question is, will the introduction of a market and variable fees close the funding gap?" he asked. "The answer is patently no.

"It will by 2009 before the universities receive the £1.1 billion this package will give them.

"By then there will need to be a massive increase in fees in order to give them the money they need."

Nick Brown, a former Labour minister who had been poised to vote against the government, said ministers had now done enough to meet his concerns.

In the forthcoming spending review money would be set aside to meet any recommendations by the promised independent review of the impact of fees, he said.

Continuing to object to the principle of variable fees, Brown said he favoured a graduate tax for those who gain financially from their degrees.

And expressing anger that there had not been more consultation on the proposals, he said that the "marketisation" of higher education was wrong.

But Brown accepted that the education secretary had gone "a long way" to meet his concerns over debt levels.

Former Conservative leader William Hague said the vast majority of MPs had been elected on manifestos ruling out top-up fees and that if the Commons passed the legislation it would be bad for politics and democracy.

"It would be better for the health of our democracy if honourable members opposite were loyal to the voters and kept faith with the country and were true to their word than were loyal to a transient prime minister," he said.

Labour MP Barry Sheerman, chairman of the education select committee, said that while he didn't agree with the whole Bill he accepted it would improve on existing circumstances.

Another former Tory education secretary, Gillian Shephard, warned that access to university should be based on "merit on capability and not government-set targets".

Clare Short, ex-international development secretary, said the government was breaking its promise to the electorate.

She added that polices were being introduced by Number 10 without consultation.

"We've seen this over and over again and it leads to bad policy making," she warned.