Ministers appear to have ruled out allowing universities to set unlimited tuition fees in England.
Deputy Prime Minister Nick Clegg said the government was still considering its response to the Browne Report, which recommended unlimited fees.
But when pressed about whether fees would be capped, he said: "Correct".
The Russell Group, which represents Britain's top universities, said "rowing back from Browne" would be a "wasted opportunity".
It comes as the education secretary, Michael Gove, confirmed that some schools will face budget cuts to pay for the government's "pupil premium" policy, aimed at pumping extra money into the schooling of the poorest pupils.
Mr Clegg told BBC One's Andrew Marr show he regretted ditching his pre-election commitment to scrapping tuition fees, but it had to be done due to the financial situation the country was in.
He said the government wanted to take the "best" parts of the Browne report to build a system that was fairer to poorer students but also gave the top universities the funding boost they needed.
Asked about Lord Browne's recommendation for unlimited fees, he said: "I am uneasy about the idea that you, in theory, have unlimited fees. So we are looking at something which would be more restrained."
Business Secretary Vince Cable also appeared to confirm plans for a cap.
He said the government had not yet finalised its plans for higher education funding but added: "I don't think there's any prospect of having unlimited fees - that simply isn't going to arise."
Mr Cable told Sky News that Universities Minister David Willetts had already "made it very clear that that clawback mechanism was not attractive".
The business secretary said: "We're not ruling things out. We're looking at this very carefully, what Browne had to say - but I think that particular approach was one we're not going to pursue."
The review by Lord Browne recommended universities in England be free to set their own fees but face a levy on sums above £6,000.
Ministers have stressed that no decision has been made but say proposals to raise fee levels would be put before MPs by Christmas.
But the suggestions of a limit on the amount students could be charged did not go down well with Britain's top universities.
Dr Wendy Piatt, director general of the Russell Group, said: "Rowing back from Browne and re-imposing a cap would be a real waste of an opportunity to allow our leading universities to provide the high quality education that their students deserve.
"However, while we acknowledge the need for some contribution to the costs of higher loans, we are concerned about the large size of the levies proposed by Browne."
But shadow education secretary Andy Burnham, for Labour, said: "I believe they are creating an elitist education system where the best universities will only be for the very well-off."
Speaking last week at a higher education conference, David Willetts said there were some "very difficult issues" around the proposed fee cap and levy.
Lord Browne proposed that if universities wanted to charge fees of above £6,000, they would face a levy (payment to the government) - which would go towards the cost of lending the money to students.
This would rise with each extra thousand pounds the university wanted to charge.
But Mr Willetts said the idea had "aroused quite a lot of concern across the sector", and said it could cause universities to drive their fees up higher to reach a given level of income.
He said the government recognised there were arguments for a lower levy or for "sticking with a fee cap".
He also floated the idea of a two-tier fee cap.
Speaking later in response to reporters' questions, he said: "I don't think it's sensible or sustainable to imagine having an unlimited fee cap."
Last week, Vince Cable said he was considering a £7,000 fees cap.
Currently students in England, Wales and Northern Ireland are charged a maximum of £3,290 in fees per year.
The government pays the money up front and the student then pays it back once their income reaches £15,000 after graduating.
University courses in Scotland are free to Scottish students, although there is increasing pressure for some form of graduate contribution.