Three quarters of graduates now obtain a first class degree or a 2:1 as the Office for Students warns it will name and shame universities found to be deliberately inflating grades.
Figures released yesterday by the Higher Education Statistics Agency reveal that persistent grade inflation resulted in 100,495 students graduating with top honours last year, up 40 percent in just four years.
The year-on-year rise has prompted calls for wholesale reform in the sector, amid fears that the trend is devaluing qualifications and making it harder for employers to differentiate between graduates.
It comes less than a year after revealed that the number of first class degrees awarded by British universities had increased five-fold within the last two decades.
Last night the new university regulator warned that universities found to be engaging in foul play would face “strong regulatory action”, as it reiterated calls for the creation of sector-wide standards for awarding degrees.
A spokesman for the Department for Education said that suspect institutions would be subject to monitoring and analysis and, if found to be breaching regulation, face being publicly listed.
They added that if universities failed to comply, the regulator would be free to pursue harsher punishments, including fines, suspension and even being stripped of their degree awarding status.
“The new Office for Students will, as a matter of routine, undertake analysis of degree classification trends and identify any cases where the pattern may suggest good or poor practice,” they continued.
“The agreement of clear, sector-recognised standards will also be key to enabling the OfS to take strong regulatory action where grade inflation is happening.”
Despite the Government’s repeated calls for the sector to tackle the problem, experts have warned that institutions are bumping up marks in order to maintain their league table rankings.
They are currently allowed to set their own grade boundaries and algorithms for calculating final degree classifications - a system which critics say is open to abuse.
They include Higher Education Academy, which recently found that nearly half of UK universities had changed the way they calculate grades to mirror systems used by their rivals.
The organisation added that several universities were altering how they award degrees so that “students were not disadvantaged compared to those in other institutions”.
"Universities are essentially massaging the figures, they are changing the algorithms and putting borderline candidates north of the border,” said Nick Hillman, director of the Higher Education Policy Institute (HEPI).
"There is this level of competition which means that if you want to do better than your competitors you need to award the same number or more first than them.
"Competition, in part driven by league tables, has added extra incentives to award higher marks.
"Ultimately it is the students that lose out. If it continues we will be looking at a serious problem".
At some universities, the number of first-class degrees has almost doubled since 2012.
Examples include the University of Surrey, which has seen a 41 percent hike in five years, and the University of East Anglia, where the number of firsts has trebled to 37 percent during the same period.
Universities UK last night claimed that the current degree classification system was a “blunt instrument”, adding that university leaders were looking at ways to tackle to the issue.
"The sector has changed significantly in recent years, with universities putting more emphasis on the quality of teaching and investing in technology and learning support,” a spokesman added.
"Universities UK is carrying out further work with higher education organisations to explore how the sector defines degree classification boundaries and evaluating the causes of the increasing proportion of good degrees awards.
"It is important that students, employers and the public have confidence in the degree classification system and academic standards."