Proposals for universities to set their own tuition fees, making students pay thousands more for their degrees, are "not the last word" on funding, according to the deputy leader of the Liberal Democrats.

Simon Hughes said all Lib Dem MPs are "very conscious" of the position they took on tuition fees and of the party's policy of campaigning against fees in the last general election.

His comments came as former BP boss Lord Browne published his review of student funding in England, calling for the current £3,290 cap on fees to be lifted, with the prospect that institutions could charge as much as £12,000 a year for some courses.

The recommendation is politically explosive for the Lib Dems and the future of tuition fees is a major faultline between the party and its coalition partners, the Conservatives.

A number of backbench Lib Dem MPs, including Greg Mulholland and John Leech, have already warned they will vote against any rise. Many Lib Dem MPs signed the National Union of Students (NUS) pledge to vote against any increase in fees.

In a statement, Mr Hughes said: "All Liberal Democrat MPs are very conscious of the positions we have taken on higher education and the policies we campaigned for at the last election.

"We all have a duty to read and consider fully Lord Browne's proposals and the Government's response. Today will not be the last word on policy for funding higher education in England.

"All MPs should now engage constructively in questions, answers and debate in Parliament. We must also listen to the considered responses of our constituents and the wider public before we come to take our final personal and collective decisions on the best way forward."

The current "unfair" fee system needs to be changed, Mr Hughes acknowledged, but he added: "Parliament should only support a progressive system which takes into account future earnings and makes sure that those who benefit most financially from a university education contribute the most."

The Lib Dems' previous favoured option of a graduate tax was ruled out by ministers at the weekend and has been dismissed by the Browne review as "unworkable".