The Government is to publish a higher education green paper before the end of the year to tackle issues emerging from its review of the sector.

The news was leaked by junior ministers shortly before the Cabinet reshuffle and the creation of the new Department for Education and Employment, and was confirmed this week by DFEE sources.

But the paper is unlikely to contain many proposals for radical change or to lead to legislation before the next General Election.

The Labour Party predicted it would amount to a "fudge" on higher education policy in an effort to delay action on pressing issues. The prospect of its publication by December, however, could mean Labour's own further and higher education policy paper will now be published next spring rather than around November as planned.

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The green paper is the product of the Government's review of higher education, which has been gathering views on the future size, shape and purpose of the sector and is preparing to look at funding. Responses have signalled enthusiasm for moves towards a more flexible sector supporting "lifelong learning" while maintaining high standards and protecting academic freedom.

The paper will also have to include the implications of the merger of the education and employment departments and the creation of a post-16 education and training directorate, announced by Education and Employment Secretary Gillian Shephard last week.

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It may also consider the ramifications of a reorganised post-school qualifications structure as proposed by Sir Ron Dearing this week in an interim report on his qualifications review ( page 52).

Some political experts believe the paper could be designed to sound out opinion on higher education proposals which may be included in the Conservative Party's General Election manifesto. A Conservative manifesto group has been conducting its own higher education review which is feeding into the Government's, although its members are so far split over proposals for radical funding reforms.

Vernon Bogdanor, reader in government at Oxford University, said although a green paper did not have to lead to legislation, it was likely this one would because "you can usually judge the seriousness of it by the length of the consultation period", which could well extend beyond the General Election.

Another potential influence is an imminent report on the conclusions of a two-day seminar on the future of higher education held in Oxford last month and attended by vice chancellors, leading educationists and funding council and Government officials.

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One delegate said: "There is an agenda to address higher education as a major national industry for which we desperately need a coherent national policy rather than dealing with it on an ad hoc basis."

Bryan Davies, Labour's further and higher education spokesman, said: "The Government has only just finished the first stage of its consultation. You can imagine how sketchy a green paper based on that is likely to be."

Don Foster, the Liberal Democrat education spokesman, added: "It gives them the opportunity to float some issues without any commitment, and gives the Conservatives a clear idea about what they might put in their manifesto."