MPs have called for Government plans allowing universities to compete for up to one in four student places to be delayed, amid concerns it could "polarise" the sector.
This could have "undesirable consequences" if bright, poorer students feel compelled to choose lower-cost universities, a report by the Commons business select committee warns.
Ministers announced proposals earlier this year to lift the cap on the numbers of students achieving two A grades and a B at A-level that universities can recruit, affecting around 65,000 places in total.
A further 20,000 places will be on offer to institutions that keep fees under £7,500.
It means that in total, in future, universities will compete for up to 85,000 places, around one in four.
But the report warns that while it agrees that lifting restrictions on places is necessary if a market in higher education is going to be created, it should not be done overnight.
It calls for the proposals to be delayed until at least 12 months after tuition fee reforms have been brought in so that universities can be consulted on whether changes to student numbers should be phased in or introduced in a single go.
The report adds that gradually increasing the numbers of places for "low cost, high quality" courses - those costing under £7,500 - seems likely to "channel an increasing number of people into a low cost model of higher education."
Evidence given to the committee suggests that the proposals risk creating a three-part market in higher education, the report says, with "top" universities recruiting AAB students, "low price" institutions charging less than £7,500 and bidding for a share of the places on offer, and those in the middle missing out.
The cross-party group of MPs conclude that there is a risk that "the proposals could polarise the higher education sector into 'traditional' universities versus a 'low cost' alternative".
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