The Government is taking a fresh look at funding arrangements for Oxford and Cambridge universities, including the automatic payment of college fees.

Ministers are preparing to make a final decision soon on the long-running question of how funding for Oxbridge should be set in the context of a bigger, more diverse and cash-strapped sector.

It was revealed this week that increases in Oxbridge fees for this year were pegged to increases for a "top ten" group of research universities.

As well as Oxford and Cambridge, these include Imperial College, University College and the London School of Economics in London, plus Lancaster, Sussex, UMIST, Warwick and York. The Department for Education said that they were chosen on the basis of both their teaching and their research.

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But the DFE denied that this top ten group of research-intensive universities is going to have a special new funding arrangement in which other universities cannot participate.

The DFE said that the average unit of funding for these universities, used to set college fee increases, was arrived at by reference to student numbers. Oxbridge was allowed a 1.7 per cent rise in the college fee at the start of the current academic year.

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A spokesman said: "The whole question of the future funding arrangements for Oxbridge is under review." The DFE said that an announcement on future Oxbridge funding is likely to be made in the spring.

An Oxford University spokeswoman said the ten universities whose units of resource were used to peg the new college fees were all "research intensive" institutions, with similar missions to those of Oxford and Cambridge.

Oxbridge colleges presented the DFE with an alternative funding formula a year ago, because the old formula was becoming difficult to operate and was condemned as a hidden subsidy by politicians.