She had applied in February and was relying on a childcare grant to cover the cost of her children's nursery places.

Mr Seymour-Jackson apologised for the delays and told Claire Swinmurn her funding should arrive in her bank account by the weekend. However, she said she understood that this money would not include her childcare grants.

He said the issue was not about processing applications but a "telephone issue".

"It is genuinely very difficult for students to get through on the telephone so they worry they won't get their money on time, but they will," he said.

The decision had been taken to process all students for a "basic level" of funding so that everyone had some money to start their courses.

"We admit the situation is not perfect, but it's reasonable," he said.

Capacity boosted

The Students Loan Company said some 100,000 payments have been made in the last two weeks, and a further 700,000 are due to be paid in the next two weeks.

Minutes of board meetings of the SLC published on its website show concerns were raised in January about a likely surge in applications and the ability of the phone service to cope.

They indicate the body asked the government for extra funds to boost capacity and these were apparently given. Extra staff were recently taken on.

The National Union of Students president Wes Streeting said: "It is completely unacceptable for some of the poorest and most vulnerable students in the country to be left short of funds and it is particularly insulting for Ralph Seymour-Jackson to claim that this situation is 'reasonable'.

"Student Finance England has assured us time and again that significant backlogs would not be a problem, but now it is apparent that this is not the case."

James Greenhalgh, member of the Youth Parliament said: "Freshers week and the start of university should be an enjoyable and memorable experience for news students, who inevitably have enough to worry about, such as leaving home, coping with university life and whether the course is right for them without the added trauma of worrying about their finances".

'Come clean'

The Conservatives are calling on ministers to explain what they knew about the problems and what they did to sort them out.

They are angry they have had no reply to a letter they wrote to Lord Mandelson, who as Business Secretary is also responsible for higher education.

Tory universities spokesman David Willetts said: "This is an appalling administrative cock-up which will force many students into financial hardship just as they're beginning their studies."

He said it would be a tragedy if the government's failure led to students dropping out of university because they could not afford to support themselves.

"Ministers need to come clean about precisely when they first knew about the problems, what steps they took to sort them out and exactly how many students are going to be affected."

A spokeswoman for the Department for Business, Innovation & Skills said: "The government has been assured that more than three quarters of a million students have now had their application for funds approved and others are being processed as swiftly as possible.

"The SLC advises students and their families to check their application online before ringing in as many calls are then not necessary. The department is asking for regular updates on progress."

Universities have contingency plans, including hardship loans, to help students who arrive without funding.

Nicola Dandridge, the chief executive of the umbrella group Universities UK, said: "Universities have measures in place, such as the Access to Learning Fund, to support those students who face serious financial difficulties through no fault of their own." Angela Harrison