A private university is setting up a partnership with a further education college to offer undergraduate degrees.
Law and business degrees, awarded by BPP University College, will be taught at New College, Swindon from September.
This ground-breaking public-private link-up is an example of the kind of competition in providing degrees that ministers want to encourage.
BPP's chief executive, Carl Lygo, said the higher education sector was "changing dramatically".
"During the past year, we have been approached by a staggering number of publicly-funded providers who are actively pursuing ways in which to continue to provide quality education and training, or, in many cases, to seek help in order to survive," he said.
Last year, BPP University College became the first private university to be created in the UK for more than three decades.
This latest project marks its first partnership with a further education college - with the expectation of more to be announced later.
It allows the degree-awarding powers of a university to combine with the local reach of further education colleges.
It is an example of the more diverse higher and further education landscape that ministers want to encourage.
Under the fee regime to be introduced from 2012, ministers had claimed that tuition fees of £9,000 would only be charged in "exceptional circumstances".
But so far a majority of universities which have declared their intentions have said they wanted to set fees at this maximum level.
Ministers have warned universities that they could be undercut by new providers offering courses at a lower cost - including further education colleges.
This arrangement between a private university and a further education college shows how an alternative model might operate.
But there will be intense sensitivity over price - whether too much or too little.
Universities have been worried that charging too little will make them look like poor quality - and that charging too much will put off potential applicants.
The business and law degree courses in this partnership will cost £3,000 per year under the current fees system - slightly less than most universities.
But there has been no announcement on the fees that will be charged when the upper limit is increased from 2012.
The principal of New College, Graham Taylor, said such an arrangement will offer courses to people in a town which has no university.
The partnership with BPP will benefit people who want to study locally, says Mr Taylor, allowing the college to "offer undergraduate programmes at affordable fees in our own classrooms".