The coalition government will split up its higher education reforms in the hope the Senate will now pass its core university deregulation agenda.
Christopher Pyne believes the Senate will no longer have an issue with his plan to deregulate university fees now that he's taken away the threat of funding cuts.
The federal education minister has excised a 20 per cent funding cut to universities from legislation to be debated this week and dropped his threat to link its passage to $150 million in research funding.
Instead, the scientific research funding will be guaranteed until the end of June 2016 while a review is conducted.
Mr Pyne conceded linking funding cuts to the deregulation agenda had been a distraction that caused a two-pronged debate.
"I hope this will clear away hurdles," he told reporters in Canberra on Monday.
But the move could cost the budget bottom line as much as $1.5 billion if the parliament refuses to pass the funding cuts.
Universities Australia chief executive Belinda Robinson says the sector expects splitting the package means there won't be a funding cut, and encourages the Senate to support fee deregulation.
With Labor and the Greens intractably opposed to the government's plan, the government needs support from six of the eight crossbenchers in the Senate.
Mr Pyne is having discussions with all of them separately on Monday.
Palmer United Party senator Dio Wang and independent Jacqui Lambie told AAP the announcement had not changed their opposition.
However, Mr Pyne told reporters Senator Wang had made it perfectly clear he supported the scheme.
"If Clive Palmer gave him the green light he would vote (in favour)," the minister said.
The Senate will debate the fee deregulation legislation on Tuesday with a vote expected by the end of the week.
Prime Minister Tony Abbott says there should be no impediments to it being considered on its merits.
"The merits are great and it should be supported," he told parliament.
But Opposition Leader Bill Shorten labelled Monday's move a humiliating backdown for Mr Pyne and Mr Abbott.
"On one hand they want to coerce people into voting for $100,000 degrees by the vehicle of taking funds to scientists hostage," he told reporters.
"When that blows up in their face they then want to pretend that never happened."
Labor's higher education spokesman Kim Carr said splitting the university package would make "no difference whatsoever" in wooing the crossbenchers.
"It's quite clear the government's prepared to say and do anything to get these changes through and it's not having any impact in the Senate," he told AAP.
Greens higher education spokeswoman Lee Rhiannon said the move smacked of a last-ditch attempt to save face and avoid yet another Senate defeat.
Later, Mr Pyne admitted he said on Sunday that deregulation and research funding were inextricably linked, before deciding to split the legislation on Monday.
"Politics is a fast moving business," he told Sky News.
"I'm a fixer, I fixed it by funding it in another way."
Mr Pyne refused to spell out where he would find the money, saying he wanted it to be a "surprise" in the May budget.
Independent senator Nick Xenophon gave Mr Pyne "full marks" for trying, but said he could not support the deregulation changes.
"Christopher Pyne is a great salesman, but what he's trying to sell has lots of barnacles on it."
Former Palmer United Party senator Glenn Lazarus said he remained opposed to the legislation.
"The Abbott government needs to take this terrible measure off the table and instead increase funding to the higher education sector and get on with things," he said in a statement.
Senator Ricky Muir urged the government not to go ahead with its deregulation plans and instead take its higher education reforms to an election.
The Australian Motoring Enthusiast Party senator also urged Labor to publicly release its policy as soon as possible.
"I reject the idea that crossbench senators should carry the burden of any consequences that may arise from this legislation not passing," he said in a statement.
"I believe significant changes to Australia's higher education system should attract bipartisan support in order to maintain confidence in the sector."
WHAT'S THE NEW PLAN FOR HIGHER EDUCATION?
* Part one of legislation, to be voted on this week, deregulates university fees, expands government funding to private providers and degrees below bachelor level, and eliminates loan fees for vocational students.
* Expanding funding costs $820 million.
* Dumping loan fees costs $746 million.
* Part two, to come in May, will cut commonwealth per-student funding by 20 per cent, saving $1.9 billion
* $150 million has been found for the National Collaborative Research Infrastructure Strategy in 2015/16 (offset to be announced in budget)