Thousands of students from low income backgrounds are missing out on bursaries to which they are entitled, a university watchdog has claimed.

Over 12,000 students who could have claimed a £1,000 grant towards their education failed to do so, according to the report from the Office for Fair Access (OFFA).

The report also highlighted that over 70,000 students from low-income backgrounds did receive support in 2006-7, and that higher education institutions spent over £96 million on bursaries.

OFFA director Sir Martin Harris said: “As one might expect when implementing a financial package on such a large scale, there have been some teething problems.

“In particular, research suggests that low awareness of bursaries and scholarships amongst some young people is still an issue.”

The low-income bursary is an entitlement of all students who come from homes with an income of less that £25,000 annually, but the report suggests that many students have missed out because they failed to tick a box on their student loan application form which would have allowed the Student Loans Company to share information about their household income with their university or college.

Sir Harris added: "It was surprising to see a significant number of students fail to apply for bursaries, or consent to share their financial information with their institution, resulting in a lower than expected uptake."

The report concluded that there were no examples where students who were entitled to bursaries had applied through the correct channels and not received their entitlement. The OFFA has contacted those institutions which it believes are not doing enough to raise awareness of bursary entitlement, at the same time praising the "strenuous" efforts of many universities and colleges.

However, Vice-President of the National Union of Students, Wes Streeting, criticised the failures highlighted in the report.

He said: “Given the drop in accepted applications from working class students over the past two years against an overall increase in accepted applicants revealed in UCAS figures, the report underlines our view that the current system is failing to deliver on the government’s widening access agenda.

“We expect institutions to begin urgent discussion with students’ unions about the design and promotion of their bursary packages.”