MPs are voting now at Westminster on the government's controversial plans for university top-up fees.
Mr Clarke says MPs have a stark choice over tuition fees
The result of what is seen as one of the biggest tests of Tony Blair's career is due within 20 minutes.
Mr Blair's chances of avoiding defeat have risen after chief rebel Nick Brown's decided to switch sides.
But Deputy Prime Minister John Prescott told BBC News 24:"I cannot tell you, within an hour of the vote, whether we are going to win."
That was despite ministerial sources claiming 30 more potential rebels were now backing the government.
Mr Prescott has acknowledged defeat would be damaging for the prime minister's authority.
He asked Labour MPs: "Are you going to support it or are you going to put it down as the first step of the Tories trying to win the next election?"
CRUNCH 48 HOURS
Hutton report preview copies released to interested parties 1230 GMT Tuesday
Top-up fees debate gets under way around 1240 GMT
MPs vote at 1900 GMT
The government has a majority of 161
If all opposition MPs vote against, it needs 81 Labour MPs to rebel for plans to fall
155 Labour MPs signed a motion opposing the Bill
Tony Blair says his authority is on the line with the vote
Hutton report published 1330 GMT Wednesday
The fees vote dominates the first half of a tumultuous 24 hours for Mr Blair in which he also faces MPs after the publication on Wednesday of the Hutton report.
Nick Brown's announcement that he will back the government is a signal that at least some hardcore opponents of the government's plans are being won over.
An apparent agreement to hold an early review of fees' impact on middle income homes led to the ex-minister's switch.
BBC political correspondent Shaun Ley said a deal was brokered by Mr Prescott and Chancellor Gordon Brown - of whom Nick Brown is a close ally.
But Downing Street later denied making any significant concessions.
Speaking in the Commons, Mr Clarke told MPs the new fees regime would provide £1bn a year for universities, which would allow for an increase of around 30% in funding for teachers.
Poorer students would have the
first £1,200 of their fee discounted from their repayments or added to their
£1,500 grant while at university from 2006, he said.
If the bill is defeated on Tuesday evening, he argued that "universities will be stripped of the resources they need to address the challenges of the future".
But former Labour minister Kate Hoey questioned how anyone could trust the government to keep this commitment when "we haven't actually kept the manifesto commitment" not to introduce the fees.
Shadow health and education secretary Tim Yeo denounced the measures, saying: "This bill gives ministers the power to decide who goes to which university and to take money from any university which doesn't do what it's told.
"Let nobody fantasise that this bill opens a door to more independence for universities ... It brings all universities under tighter political control than ever before."
But Tory MP Robert Jackson, who says he will vote with the government, warned his frontbench that the way it had "chosen to handle
that issue will be remembered and will be held against you".
Phil Willis, the Lib Dem education and skills spokesman, accused Labour MPs backing the bill of "supporting a Thatcherite policy" and of "betraying the principles" on which their party was built.
Nick Brown insisted it was not the chancellor who had changed his mind, saying long discussions had addressed his key concerns.
"At the heart of my objections to the bill was this move to marketisation. I
am satisfied now that we have that proposal pretty heavily boxed in," he said.
The prime minister's official spokesman said Mr Blair was "continuing to talk" to wavering MPs, but he insisted there would be "no more negotiations" on the substance of the bill.
Ex-international development secretary Clare Short said ministers were asking Labour MPs to carry out "a very serious" breach of a manifesto promise not to introduce the fees.
She appealed to MPs to vote down "this deeply flawed" policy and then begin a debate about how universities could be funded.