The money is being made available because more students from the rest of the UK will be attending higher education institutions in Scotland than Scots students going to university in England, Wales and Northern Ireland.

Helen Liddell: "Education is central to a knowledge economy"

As a consequence of this autumn's introduction of tuition fees of up to £1,000 a year per student, £5m will be transferred from the Department for Education and Employment to the Scottish Office in each of the next three financial years.

The new money - which comes on top of the £230m made available for Scottish higher education as part of the government's comprehensive spending review - was announced by the Scottish Education Minister, Helen Liddell.

"I want this additional funding to produce concrete outcomes in terms of meeting the government's objectives of widening access and modernising teaching and research to support a knowledge economy," she told the annual meeting of the Committee of Scottish Higher Education Principals at Napier University in Edinburgh.

The Scottish official of the Association of University Teachers, David Bleiman, welcomed the move.

"After many years in which teaching and learning in Scottish higher education were starved of resources, we have at last turned the corner," he said.

Reviews

Mrs Liddell also announced reviews of the funding of the Open University in Scotland and the financial support arrangements for postgraduate students.

"Despite being a UK-wide institution the Open University has always been funded from England," she said.

"We shall be considering future funding through the Scottish Higher Education Funding Council, which will provide a greater Scottish perspective for Scottish students as we enter a new millennium with a new Scottish Parliament.

"Increasing world competition and the need for innovation means that we must ensure our most able graduates progress into research careers.

"To maximise the effectiveness of The Scottish Office funding to support taught postgraduate students, I am setting up a review to make sure the sum we spend meets our priorities of widening access and developing a knowledge economy."