It comes as the majority of undergraduates in England have been told to stay at home and not return to campus.
University students facing financial pressures due to the pandemic will have access to an additional £50 million support fund from the Government.
Universities will be able to use the extra funding to help students facing loss of employment, additional costs for alternative accommodation, or to support access to remote teaching amid Covid-19.
The majority of university students in England have been told to stay at home and not return to campus under the latest lockdown, which has sparked calls for greater financial support.
A number of universities have moved lessons online until even later in the academic year, prompting campaigns for rent rebates for term-time accommodation and tuition fee refunds.
In December, the Government announced a one-off fund of up to £20 million to help students most in need of support in exceptional circumstances.
Small-scale funding packages like this are simply a sticking plaster and not the answer to the widespread problems facing the sector
Now a further £50 million will be available, taking the total to £70 million for this financial year.
The funding will be distributed by the Office for Students (OfS) directly to universities, which will prioritise the students most in need of help.
A number of universities and accommodation providers have already said they will not charge rent to students who cannot use their university halls, but campaigners and organisations representing students have called on universities, accommodation providers and ministers to go further with compensation to students facing lockdown disruption.
The Department for Education (DfE) has said it wants providers of student accommodation – including universities – to offer partial refunds to students and ensure their rental policies have students’ best interests at heart.
Universities minister Michelle Donelan said: “This continues to be an incredibly difficult and challenging time for our students, and I am hugely grateful to all the university staff working hard to prioritise their health, wellbeing and learning during this pandemic.
“The additional £50 million that we are announcing today will mean we have distributed £70 million for hardship in this financial year alone – on top of the £256 million of Government-funded student premium which universities can use for student support this academic year.”
Last week, a survey from the Office for National Statistics (ONS) found that a growing proportion of university students were not happy with their academic experience – and nearly two in three had seen their mental health worsen.
Ms Donelan added: “This additional support will provide real, tangible help for those students struggling financially as a result of the pandemic.”
But the University and College Union (UCU) general secretary Jo Grady described the funding as a “sticking plaster”.
She said: “Whilst we are glad the Government has finally recognised the mess their dithering and U-turns have created, it should not have taken students queueing for food banks, or waves of rent strikes, for the Government to start acknowledging the scale of the problem.
“Small-scale funding packages like this are simply a sticking plaster and not the answer to the widespread problems facing the sector. The Government needs to go further and provide proper funding to avoid irreparable long-term damage to the sector’s reputation.”
Alistair Jarvis, chief executive of Universities UK (UUK), said the additional funding was a “positive step”, but added: “As the serious mental health impact of the pandemic continues to be felt, universities need further funding to alleviate the substantial increases in demand that university wellbeing and support services are experiencing.
“Although university staff are making huge efforts to offer high-quality online learning, the Government should provide support that recognises that students are missing out on the wider student experience that they would benefit from in a normal year.”
Nicola Dandridge, chief executive of the OfS, said: “The pandemic is having a profound and ongoing impact on students, with some facing severe financial hardship and struggling to cover accommodation and other costs.
“This additional funding to help students facing financial hardship is welcome. We intend to distribute it as swiftly as possible to benefit those who are most in need. We will be writing to universities and colleges with more details shortly.”