Students from the poorest homes will receive up to £3,000 a year to meet the costs of university fees under plans unveiled by the education secretary.
Tony Blair insists students must contribute more money
Charles Clarke set out in the Commons the controversial plans, telling MPs to take the whole package or none of it.
There are a series of concessions to win over Labour rebels but ministers have refused to budge on allowing fees to vary between universities.
The full cash help is for students whose families earn £15,200 or less.
The plans only affect universities in England.
Prime Minister Tony Blair is facing his largest rebellion to date and has said his authority will be "on the line" when the plans go to a Commons vote expected later this month.
PLANS AT A GLANCE
Existing upfront fees end 2006
Fees then vary - up to £3,000 a year with repayments once graduates earn £15,000+
Students from poorest homes to get up to £3,000 of help a year made up of:
- £1,200 fees subsidy
- £1,500 means-tested grant
- £300 university bursaries
Means-tested £1,000 grants from 2004 rising to £1,500 from 2006
Low-interest student loan up to £4,000 a year
Loan and fee debts written off after 25 years
New access regulator
More than 150 Labour MPs have expressed concern about allowing different universities to charge different fees.
They believe young people from poorer backgrounds would be deterred from applying for the best - expected to be the most expensive - universities.
Universities will be able to charge up to £3,000 a year, with fees repayments beginning when graduates start earning £15,000 a year.
Among the concessions offered by ministers, the £3,000 cap will be fixed throughout the next Parliament and can only be changed after that through a parliamentary vote.
There will be an independent review to examine the scheme's impact after the first three years.
Conservative shadow education secretary Tim Yeo asked why anyone should believe the promise to keep the £3,000 cap when tuition fees was the result of a broken election promise.
He condemned the plans as "bad for students, bad for universities and bad
But Mr Clarke argued: "No student from a poor background will be worse off as a result of our proposals - whichever university they attend and whatever the fee charged for the course."
A new living costs grant of up to £1,000 is already being introduced from 2004 on a sliding scale for those with family incomes below £21,185.
In a new concession, this grant will rise to up to £1,500 from 2006.
No university will be able to raise its fees without the agreement of the new access regulator.
But in a sign there would be no further concessions, Mr Clarke said the package was "to be taken as a whole or not at all" - later admitting there could be refinements.
He later told Channel 4 News the government would lose authority if it lost the vote on the plans but it was not a "resigning matter".
Mr Clarke also said any student loan outstanding after 25 years would be written off.
September 2006, maintenance loans would be raised to the middle level of students'
basic living costs.
Liberal Democrat education spokesman Phil Willis claimed the policy flew in the face of Labour's founding principles.
He argued the plans would "pull up the ladder of opportunity for thousands of poor students for generations to come".
Labour opponents have been courted at a series of meeting with ministers in recent weeks.
Some potential rebels were won over by the extra help for poorer students.
Former minister Keith Vaz told BBC News 24: "This is enough to allow me to vote for the government, although it was touch and go until I heard what he had to say."
But others still resolutely oppose the concept of variable fees, despite the new package.
Ex-chief whip Nick Brown said: "It doesn't deal with the remorseless logic of having the fees go up at the most prestigious universities and the youngsters from ordinary backgrounds just to be priced out of these courses."
Mandy Telford, president of the National Union of Students branded the bill a "disaster", which would put poorer students off more expensive courses.
Michael Sterling, chairman of the Russell Group of 19 top universities, told BBC News Online: "We support the proposals. They are carefully crafted. They don't give us everything but it's sufficient to be a step forward."
Professor Ivor Crewe, president of the Universities UK group of vice-chancellors, called the bill a "milestone" in the future of higher education.
"It strikes a fair balance between the needs of institutions and students," he said.