Universities should be given the freedom to charge students whatever tuition fee they like, the body representing the country's 750 largest employers of graduates will say today.

The Association of Graduate Recruiters (AGR) says that lifting the cap - currently £3,240 a year - is needed if standards are to be maintained in the wake of £518m of cuts being made by the Government.

A free-for-all, which could see fees rise to £20,000 a year for some popular courses, immediately sparked protests from student groups, who said that the idea was "offensive".

The AGR's call, made in a "manifesto" published to promote debate during the impending election campaign, coincides with a government inquiry into the funding of higher education, which is expected to report after the election and is under pressure to recommend an increase in tuition fees. 

A survey of university vice-chancellors in March 2009 found that the majority would like to see a rise, to £6,500 a year, on average. Sir Richard Sykes, the former rector of Imperial College, London, said he wanted to be able to charge full cost fees - which could be as high as £20,000 - for some courses.