Thousands of teenagers may end up on the dole instead of going to university because of a funding cap on student places, the government is being warned.

Phil Willis, chairman of the Commons Education Select Committee, says a cap on places in England must be lifted.

Applications are up 9% on 2008 - about 40,000 people - but Mr Willis says he has been told as few as 3,000 extra first-year places have been funded.

Ministers insist there are a record number of funded places on offer.

The latest figures from the admissions service UCAS suggest that by the end of the summer 600,000 people may have applied for a university place in England.

Cuts in clearing

The government's target is for 40% of all adults in England to have a university education by 2020.

But given this aim, some critics are questioning why ministers are not doing more to meet the demand for places.

Originally, the government said it wanted to fund an extra 15,000 places for this year's entry, but it eventually capped the number at 10,000.

Mr Willis now says UCAS have told him in private that the figure for extra full-time first year students is actually going to be just 3,000.

According to UCAS, the growth in demand combined with the funding arrangements could mean there will be 50% fewer places available through the clearing scheme for students who have not got the required grades.

The number of places available could be as low as 16,000 - a worrying figure, UCAS says, as last year some 44,000 teenagers applied for places through clearing.

Lifting the cap is absolutely essential, otherwise we are going to see more students in dole queues than lecture halls Phil Willis Commons Education Select Committee

"What will happen this year is that some 30,000 will be looking for places in clearing that won't be there," Mr Willis says.

"Lifting the cap [on funded places] is absolutely essential in 2009/10 otherwise we are going to see more students in dole queues rather than lecture halls."

'Really upsetting'

The Department for Business, Innovation and Skills has insisted there will be more students going to university than ever before this year.

But Mr Willis has written to Business Secretary Lord Mandelson to ask him to provide extra funding to take the pressure off the system.

"My committee is concerned that in 2009 many more prospective students than in previous years are going to have their applications for places in higher education refused," he says.

UCAS point out that anyone who has been offered a place and who gets the necessary grades will be guaranteed a place.

But one sixth-former from Haringey, north London, told the BBC she feared that, with a reduction in clearing places, there would no longer be a safety net for those whose results were less than they had hoped.

Bukky Adeneye said: "I've worked very, very hard and then you miss out on, let's say, one mark just to get the grade and you've missed that and you've wasted two years of your life and it would just be really upsetting."