Stephen Farry, minister for employment and learning, said fees would be subject only to an inflationary rise – meaning they will be around £3,500 in 2011-12, up from £3,290.

Fees will rise in line with inflation over the next four years.

University budgets will also be protected. Martin McGuinness, the deputy first minister, said that the £40 million needed to avoid much higher fees would be found by top-slicing money from other departments.

A statement to the Northern Ireland Assembly on fees for students from the rest of the UK is expected on Monday.

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At English universities, the maximum fee level will rise to £9,000 in 2012-13.

Mr Farry said: “The decision clearly demonstrates recognition of the importance of higher education for our economy. Our universities fulfil a crucial role as economic drivers, contributing positively to skills, research and development.”

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Tony Gallagher, pro vice-chancellor at Queen’s University Belfast, said the move was “good news for students, parents and Northern Ireland”, and added that the decision had ended the uncertainty facing local applicants.

Adrianne Peltz, president of the National Union of Students-Union of Students in Ireland, said: “We are delighted that the executive has listened to the needs of students and not raised tuition fees. It must ensure however that it is not robbing Peter to pay Paul by taking funding from other forms of education – it is vital that in difficult economic times students at all levels are protected.”