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The UK's first new private sector university college for more than 30 years is being announced by the universities minister.

David Willetts will allow London-based BPP, which has 14 regional branches, to become a university college.

The new college, which offers law and business degrees, wants to expand into health and teaching degrees.

Private universities will help to create a "dynamic and flexible" degree system, says Mr Willetts.

But the UCU lecturers' union warned that an expansion of the private sector would be a "disaster" and that the creation of a new private university was the "beginning of a slippery slope".

The new private-sector university college has ambitions to set up a range of new courses in the next 12 months.

A planned school of healthcare could offer degree courses in areas including dentistry, nursing, radiography, speech therapy, psychology and physiotherapy.

"It is healthy to have a vibrant private sector working alongside our more traditional universities," said Mr Willetts, who has conferred university college status with immediate effect.

"I am delighted that, less than four months after coming into office, we are creating the first new private university college in more than 30 years."

Adding to the significance of this move is that the new BPP University College of Professional Studies is part of the group that owns one of the biggest universities in the United States, the University of Phoenix.

The profit-making university sector has grown rapidly in the United States - and this announcement signals the intention to have more such private providers in the UK.

Mr Willetts says that private universities will help to develop innovative ways of delivering courses, such as online degrees.

Expanding the private sector is seen by the government as a way of tackling the financial pressures and lack of places facing the university system.

Private universities would add extra capacity, when hundreds of thousands of applicants are set to miss out on places this autumn.

The BPP University College will also receive no money from the higher education funding councils.

As a private university it will also be able to set its own level for tuition fees.

The public sector universities have faced a strict limit on expansion, with individual universities facing fines of up to £3m for recruiting too many students last year.

BPP already has degree-awarding powers. It has 6,500 students taking courses in its law and business schools and a further 30,000 taking accountancy qualifications.

It will be the first private university college to have been created since Buckingham in the 1970s, which was first created a university college and then later became the University of Buckingham.

So far Buckingham has been the only fully-fledged university in the UK operating without direct government funding.

"The education landscape is changing, and over the next decade we will see a different picture emerging, where both students and employers will drive demand for their preferred method of study and training," says BPP chief executive, Carl Lygo.

"We see ourselves as a pioneer in this field, and hope that our unique status and self-funding model will lead the way in which other providers will be able to operate in."

But Sally Hunt, leader of the UCU lecturers' union, attacked the creation of the new university college as a threat to standards in higher education.

"Today's news could mark the beginning of a slippery slope for academic provision in this country," she said.

"Encouraging the growth of private providers and making it easier for them to call themselves universities would be a disaster for the UK's academic reputation. It would also represent a huge threat to academic freedom and standards."

"Private providers are not accountable to the public and do not deserve to be put in the same league as our universities," said the leader of the lecturers' union.

Pam Tatlow, chief executive of the Million+ group of new universities, also opposed the expansion of the private sector.

"Today's announcement suggests the coalition will favour private universities, where the motive is to deliver profits for a holding company and for shareholders, at the expense of publicly funding universities," she said.

This announcement on setting up the new university college will be seen as another piece in the jigsaw of re-shaping higher education.

A review of funding and fees in higher education is set to report in the autumn.

Speaking ahead of its findings, ministers have spoken of the need for a more varied system, including more private providers, two-year degrees and students living at home.

There are also disputes over whether tuition fees should be increased or a graduate tax should be introduced.

Ministers have recognised that demand for degree courses is set to grow. But they have warned that the current funding arrangements are unsustainable.