Protestors campaigning against the proposed increase in tuition fees shouted slogans as she arrived and left the university.

Students argue that allowing universities to charge up to £3,000 per year in fees will deter applications, particularly from poorer students.

But Mrs Hodge defended the plans for student funding, arguing that it was dishonest to pretend that the current system provided a "level playing field".

You haven't got a level playing field at present, don't let's pretend we are creating a two-tier system if there is inequality at present Margaret Hodge, Higher Education Minister

And she said that if there was a clear benefit from going to university, then it was only fair that students could make a contribution.

"We all know that if you go through and obtain a degree your earnings will be massively enhanced simply by virtue of getting that degree," Mrs Hodge told students.

"If there's that personal advantage that comes out of going to university, isn't it right that there should be an additional contribution from those who get the personal advantage?"

Allowing universities to set different levels of fees was only a recognition of differences that already existed between institutions.

"People have pretended that every institution is the same and they are not and they do have different assets."

Inequality

"You haven't got a level playing field at present, don't let's pretend we are creating a two-tier system if there is inequality at present."

But students at the university spoke against the minister.

If applicants were already put off because they thought that Cambridge was too expensive, then one student asked: "How do you think turning that myth into a reality will help access?"

Another student said that the levels of debt would deter applications.

"It's hard to take on that amount of debt, does the Government really appreciate how hard it is?," said Sarah Donachy.

Another student hander her his Labour party membership card in protest.

"I have done this because of their higher education policy, I have become totally disillusioned with the Labour party and all it has done after coming into power," said Stuart Barten.