Financial support for thousands of prospective students is to be cut, the Universities Secretary confirmed.
The family income threshold at which students are eligible to receive a partial grant will be set at £50,020 from next year, a cut from £60,000 set in June 2007.
It comes after the Government miscalculated increases in the bill for higher education.
The Department for Innovation, Universities and Skills could not say how many students would be affected. It was also announced additional student numbers would be capped at 10,000 next year.
It was originally thought 15,000 extra places could be available. This means there will be 5,000 fewer places on offer next year despite signs record numbers could apply.
An aide to Mr Denham said the Government was “committed” to growing student numbers. But because there has been a rapid rise in applications there was an attempt to slow the acceleration.
She said: “We want to ensure the growth in student numbers is manageable and there is proper funding per student which is why why we are continuing to grow student numbers by 10,000 but we don’t want a greater increase than that.”
Liberal Democrat universities spokesman Stephen Williams said: “Ministers got their sums completely wrong. This kind of incompetence is not going to persuade young people the Government is committed to supporting them.
“A significant number of students hoping to enter university next year are no longer going to be entitled to the grants they were counting on.
“This will come as a shock to many young people – particularly those who are currently on gap years and will be starting university next year.
“As we enter a recession, ministers are going to have to face up to the fact that more students are going to be expecting to receive maintenance support in the years to come.
Asked by MPs about cuts to student grants at a universities select committee this morning, Mr Denham said: “Of course there’s an adjustment compared to what students who went to university this year received.
“We’ve done that to get the right balance between my decision to spend more on student finance, because of the numbers of low income students and the need to make some changes to the student financial support system so that the system comes into equilibrium.”
He said it had been difficult for his department to predict “with absolute precision” the number of people within the system, because it had to use data available when the grants were increased last year.
“You are only going to be 100 per cent if you have been running the system for some time,” he said.
Shadow Universities Secretary David Willetts said: “Gordon Brown announced a new system of grants in his first few days as Prime Minister, but this has now fallen apart at the seams.
“From next year, first-years, second-years and third-years at university will all be on different maintenance grant regimes.
“This is a heavy blow for students, 65,000 of whom have already applied. The key figures are hidden in the announcement.
“How many students that would have been eligible for help if they had started university this year will no longer be eligible?’’