PUP Senator Jacqui Lambie says university fee deregulation won't happen on the PUP's watch.

PUP Senator Jacqui Lambie says university fee deregulation won't happen on the PUP's watch. Photo: Alex Ellinghausen

Senate kingmaker Clive Palmer has stated categorically that his party will not vote for the deregulation of university fees when the Abbott government presents legislation to the Senate. Mr Palmer's stance was backed by Palmer United Party senator Jacqui Lambie, who called on the Nationals to ''grow a set'' and oppose fee deregulation.

When asked whether his party was open to supporting fee deregulation, Mr Palmer replied: ''No.'' PUP policy is that university education should be free.

Senator Lambie said fee deregulation ''will not happen on PUP's watch … If the Nationals grew a set, they could also say no to the Liberals on key issues, like university deregulation, which, of course, will see campuses close in regional country areas and bush families greatly disadvantaged.''

The government will need the support of at least two senators from the PUP/Australian Motoring Enthusiast Party alliance to pass its higher education package. It plans to introduce a bill this month to deregulate university fees, reduce course funding by an average of 20 per cent, increase the interest on student debts and extend government support to students at TAFEs, private colleges and sub-bachelor degree programs.

Last week, Education Minister Christopher Pyne said he took heart from the fact that Mr Palmer had not said he would block the government's reforms.

''I don't think [Mr Palmer] ever said he was going to vote against our higher education reforms,'' Mr Pyne told the ABC. ''If you haven't said no, then we're a long way from ending the siren, as they say.''

Mr Pyne later said he believed the Coalition and PUP would work closely together ''to bring about the necessary reform for universities and students that is needed''.

Mr Pyne, who indicated he may give ground on a plan to peg student debts to the government bond rate, said he had been in ''constant communication'' with Mr Palmer.

HECS architect Bruce Chapman predicted fees could double - or even triple - at prestigious universities under a deregulated system.

Mr Palmer's comments will concern university vice-chancellors, whose worst fear is a blocking of fee deregulation but support for a 20 per cent cut in course funding.

Universities Australia and the Regional Universities Network support fee deregulation, saying it is the only policy that will make universities sustainable in the context of declining government funding.