The fair access office was set up when "top-up fees" came in
Bursaries for England's poorest students will no longer have to cover the gap between grants and fees.
The Office for Fair Access (Offa) has decided the minimum bursary universities must offer if they charge fees should be 10% of the fee level.
Currently it has to make up the difference between the £3,290 annual fee and the maximum grant of £2,906.
For next year grants are frozen but fees go up. The bursary will be £55 short of the £384 difference.
Offa's move follows revised guidance from the Higher Education Minister, David Lammy.
This says most universities in England (87%) offer more than the minimum bursary.
STUDENT SUPPORT IN ENGLAND
Fee: £3,225 / Grant: £2,906 / Gap: £319 / Bursary £319
Fee: £3,290 / Grant: £2,906 / Gap: £384 / Bursary £329
The decision to freeze grants for next year would have meant some universities which only offer the minimum bursary because they already have a very diverse student intake would have to increase their current bursary commitments by around 20% over one year to continue to cover the gap.
In response, the fair access director, Sir Martin Harris, said: "In 2006, the first year of the new student support arrangements, the minimum bursary was £300 which was 10% of the then maximum fee of £3,000.
"By re-establishing this 10% level for future years, we will ensure that the value of the bursary is not eroded over time in comparison to the fee. This will give assurance to students and institutions alike."
The decision has caused outrage at the National Union of Students.
NUS vice-president Aaron Porter said: "Today's announcement is nothing short of shameful.
"In 2004, we were told that universities would only be allowed to charge top up fees if they guaranteed that poorer students would not be out of pocket. The government has now gone back on its word."
He said the government had created a problem for those universities with larger proportions of poorer students, by freezing the maintenance grant.
"But the answer cannot be simply to leave these students short of the funds they need to continue their education.
"Instead, the government should implement a national bursary scheme.
"At the moment, we have a ludicrous situation where those institutions with the lowest proportions of poorer students are the ones with the biggest bursary pots."
A spokesman for the Department for Business, Innovation and Skills (BIS) said the government was spending more than £5bn on generous packages of student support this year alone.
"Record numbers of students are at university, and the number of young people from poorer backgrounds going to higher education rose by 8% last year."
But the shadow universities and skills secretary, David Willetts, said the latest cutback was "the story of the Brown premiership - warm words followed by broken promises".
"In the same week that Alan Milburn is talking about social mobility, the government are making it harder for people with high aspirations but low incomes to reach university."
And Sally Hunt, the general secretary of the University and College Union, said: "I cannot understand why a government that is looking so hard at social mobility has taken the decision to charge the poorest students more money to attend university."
Currently tuition fees are £3,225. Maximum grants - for students whose family income does not exceed £25,000 - are £2,906, leaving a gap of £319 which is exactly covered by the minimum bursary.
In 2010-11 fees will be £3,290 and grants still £2,906, leaving a gap of £384. The minimum bursary will rise, and by more than inflation, but only to £329 - leaving £55 uncovered.
Offa was established under the Higher Education Act 2004 to safeguard and promote fair access to higher education.
All publicly funded higher education institutions in England that wish to charge tuition fees above the basic level of £1,225 have to submit an access agreement to it for approval, showing its plans for bursaries and other financial support for lower income and other under-represented groups.