The highest number of first class degrees on record were handed out last year, with almost one in three students graduating with top marks amid concern about grade inflation.

Of those who completed undergraduate degrees last summer, 110,475 students across the UK (28 per cent) were awarded a first.

The proportion of first class degrees has increased by two per cent each year since 2013/14 and four-fold since 1994/5, according to figures published by the Higher Education Statistics Agency (HESA).

The latest figures come amid mounting concern about grade inflation, with both the higher education regulator and Education Secretary both urging universities to take action over the issue.

Damian Hinds has previously called on the Office for Students (OfS) to “deal firmly” with any institutions “found to be unreasonably inflating grades”.

The lifting of student number controls in England in 2015 gave universities free rein to recruit as many undergraduates as they see fit - but the move has led to accusations that they now act like businesses, seeking to maximise their revenue by recruiting as many students as possible.

Universities are in fierce competition to attract students and offering a high proportion of top degrees is seen as one way to entice school leavers to an institution.

Chris McGovern, a former Government advisor and director of the Campaign for Real Education, said: “Qualifications are being devalued. Universities are competing to pull in the punters, and if they can offer a high likelihood of getting a first, it is a big draw.”  

He added: “In the long term it will damage the credibility of our education system. In the end it will mean an ordinary degree will hold no weight – and people will have to get masters degrees or PhDs to stand out.”  

Last month the higher education watchdog warned universities to curb their “spiralling” grade inflation. The OfS threatened institutions with sanctions, including fines or even de-registration, if they fail to take action over the issue.

Students who left school last year with CCD or below at A-level were almost three times more likely to graduate with first class honours than they were in 2010-11, according to the regulator’s own research.

Nicola Dandridge, chief executive of the OfS, has said the grade inflation since 2010 is “significant" and “unexplained”, adding that the sector must “quickly get to grips” with the issue.

The figures come as vice-Chancellors have expressed concern over universities’ falling entry requirements following the removal of the student number cap.

Just 55 per cent of university chiefs thought the removal of number caps was “highly beneficial”, according to PA Consulting’s annual higher education report.

The report’s survey of 160 vice-Chancellors found that some voiced concern that “intense competition” between universities for shrinking pools of qualified recruits has had a “damaging” impact.

They said it has led to: “Reduced entry standards and grade inflation, the rise of unconditional offers, increased class sizes, poor experiences for some students, falling enrolments for less prestigious institutions and reluctance to collaborate with local competitors.”

One vice-Chancellor told the report: “We have been sleepwalking into the predictable workings of an unregulated mass market.”

A Department for Education spokesman said it is “concerning” that the “continued increase in firsts across the sector is not proportionate to improving standards”.  

The spokesman went on:  “A key strength of our higher education sector is its independence, but universities have a duty to maintain the value of the degrees they award.  “We have urged universities to tackle this issue and the Office for Students will use its powers to drive change if the sector does not quickly get to grips with this issue.”