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The Open University has announced tuition fees of £5,000 per year for the equivalent of a full-time place for students in England from next year.

This will mean that the Open University, which provides degree courses by distance learning, will have among the lowest fees in England.

Vice chancellor Martin Bean promised "high-quality, flexible and great value-for-money education for all".

The majority of universities will charge £9,000 for some or all courses.

More than two-thirds of the Open University's students are studying part-time - and the university will be expecting to benefit from the introduction of loans for part-time students.

For a typical part-time Open University student, studying at the level of half of full-time, the fees will be £2,500 per year.

Mr Bean said that the extension of the loan system represented the "beginning of a new era for part-time students".

At present the university has 264,000 students taking more than 600 undergraduate and postgraduate courses and professional qualifications - which it says makes it the largest single higher education institution operating in the UK.

The university has reported a surge in younger students taking its degrees - increasing by a third last year.

Pitching its fee below many other universities will be seen as adding to its competitive appeal for undergraduates in England facing a big increase in fees from 2012.

Although the Open University's fees will be among the cheapest - this still represents a substantial increase. The current full-time equivalent for an Open University course is in the region of £1,800 per year.

Mr Bean said the fees had been set at the lowest affordable level.

The government's White Paper on higher education, published earlier this month, promised a greater emphasis on competition from providers outside mainstream publicly-funded, full-time, campus-based universities.

Among these has been a private college with its own degree-awarding powers, the ifs School of Finance, which announced fees of £5,750 to £6,000 per year, undercutting many rival institutions.

But a large majority of universities have set their fees in the region of £8,000 to £9,000.

International reach

The Open University, created in 1969, was first known for its television broadcasts but has become a pioneer of using online technology.

It claims the world record for the highest number of downloads from any university on the iTunes U service - currently in the region of 36 million. This service provides a free distribution of university lectures and course material.

The university has also developed services overseas, operating in more than 20 countries. This includes funding from the United States to support a project to cut drop-out rates from higher education, in a pilot scheme with 10 US colleges.

The proposals for greater competition are also expected to bring more overseas providers into England's higher education market, including those offering online degrees.

"We're clearly going to see a lot more diversity in the landscape," said Mr Bean.

As such he says it will be more important than ever that students' choices about courses are based on "quality rather than price".

A spokesman for the Department for Business, Skills and Innovation said: "Our reforms extend tuition loan support to part-time students for the first time because we want a more diverse higher education sector that is open to all those with the ability and desire to study at a higher level."

The fee level of £5,000 per year applies to students from England. The Open University says that it expects students in Scotland to pay a similar amount to the current fees of £1,400 per year.

The university says that in Wales, the cost is "likely to be lower than in England as a result of additional support from the Welsh Government".

There has yet to be a decision on future fees for Northern Ireland.