Simon Thomas has argued that falls in applicants and acceptances to Welsh universities this year show that Cardiff's policy of paying the majority of tuition fees for all Welsh-domiciled students, regardless of where in the UK they study, is unsustainable and will lead to a "spiral of decline".

He has written a consultation document that says the Welsh government's approach is "dependent on sufficient numbers of students from other UK countries studying at Welsh universities in order to fund them".

The number of students from England, Scotland and Northern Ireland accepted by Welsh institutions this year has fallen by almost a quarter, according to statistics released by the Universities and Colleges Admissions Service on 20 September.

From this academic year, Welsh-domiciled students will be charged up to ?9,000 at any university in the UK, but the Cardiff government will cover their fees above ?3,465 a year.

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UK students from outside Wales face fees of ?9,000 a year to study at the country's universities.

Mr Thomas' consultation document argues that this policy is "essentially, subsidising those [non-Welsh] universities".

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The nationalist party has not made a definite decision on which policy to adopt, but following party meetings there was a "clear steer" to "[only] support Welsh students studying in Wales" after the next election in 2016, Mr Thomas said.

The fall-off in the flow of UK students going to Wales - and the overall fall in students accepted at UK universities - showed that the current policy could not be maintained in the longer term, he said.

In response to the consultation, Leighton Andrews, the Labour education minister, countered that Plaid Cymru had supported the current policy when it was in government in 2010.

In a separate development, the University of Wales, Newport, has said it will shut 18 courses in 2013 after a new method of allocating places introduced by the Higher Education Funding Council for Wales cut its 2013-14 intake by 20.4 per cent.

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A Newport spokesman said: "It is important to note that all students on these programmes will be unaffected and no redundancies are planned as a result."

david.matthews@tsleducation.com.