The government's claim that its top priority is to increase social mobility has been undermined by a damning report by a higher education think tank.

The Higher Education Policy Institute has chosen A-Level results day to publish a study, which concludes that changes to tuition fee rates will make it far more difficult for bright students from poorer backgrounds to attend Britain's elite universities.

The report also claims that the changes could lead to greater than expected costs for the taxpayer. It concludes that the government's calculations on how much the new fee structure will cost were based on 'highly optimistic assumptions'. The HEPI believes that because more universities than expected are charging the full amount of £9,00 per year, loan costs to the government will now be higher than previously thought, costing the Treasury approximately an extra £500m a year.

In its recent white paper, introduced in June, the Department of Education attempted to neutralise the effect of more universities than expected announcing that they would charge the maximum fees of £9,000 per year.

In an attempt to bring those costs down the government said it would make universities 'compete' for the highest-achieving quarter of students who receive grades AAB or better at A-Level.

Currently institutions are forced to accept a fixed number of government-funded places for undergraduates, limiting competition and ensuring that some students miss out on their first choice.

The government predicts that under the new system, described in the white paper, the middle-ranking universities will come under pressure to reduce fees or improve their standards, because otherwise they will not be able to attract enough of those 65,000 highest-performing students.

Another band of 20,000 places will also be introduced, which universities will only be able to take up if they charge £7,500 or less.

However, the Higher Eduction Policy Institute raised concerns in its report about the government's proposals.

It said that while the white paper would achieve its main aim of reducing loan costs, it would also have unwelcome consequences for the government, students and universities.

The proposals would result in a "polarised sector", the HEPI said, in which most universities would charge £7,500 or less while the minority of top institutions, who would always be able to attract the best students, charge £9,000.

The result will be lower social mobility, as students from disadvantaged backgrounds would be less likely to attend those top universities.

The HEPI said: "With huge incentives to recruit students with AAB+ grades, universities will provide financial incentives to attract and retain these. They will have to, because if they do not, and their competitors do, then they will lose them. Scholarships will be "needs blind", and, because school achievement and economic privilege are closely related, these scholarships will effectively provide financial support for better off students. An arms race will have been created, with no beneficiaries other than those students with AAB+ grades."

In its report, which it claims is the first analysis of the long-term effects of the white paper, the HEPI said that the proposals would also likely lead to a shortfall in the government's budget, leading to further reductions in other parts of higher education.

"If these measures are not taken, then future generations of taxpayer will have to face the consequences of lower than expected government revenues," the report said.