The Labour Party's education team was preparing to take emergency action this week to patch up its divisions over proposals for a graduate tax.

David Blunkett, Labour's education spokesman, is expected to spell out options to help fund expansion in further and higher education to the Parliamentary Labour Party on January 18.

And he will be called upon to explain his controversial use of the term "graduate tax" in his description of proposals under consideration in interviews given over Christmas and the New Year.

Bryan Davies, Labour's higher education spokesman, is concerned that alternatives to the student loans scheme which will be included in a consultation paper before the summer will be misinterpreted as a result. He has been meeting Mr Blunkett to iron out apparent differences over how any Labour-designed "graduate tax" might work.

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While Mr Blunkett's office confirmed this week that a system under which graduates would be expected to pay tax throughout their working lives was being considered, Mr Davies suggested this was a "narrow and crude concept" which was unlikely to carry much support within the party.

Mr Davies, who is writing the further and higher education consultation paper, said it was "unfortunate" the term had been used when the party was looking at other ways of extending support to further education students, and was more inclined to back a fixed term of repayment.

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"I am sure Mr Blunkett will be at pains to put straight at the Parliamentary party meeting some of the misconceptions that may be around over our proposals. We have to address the issue of exactly what we mean by a graduate tax," he said.

Mr Blunkett may face further battles with some national executive committee members, such as shadow home secretary Jack Straw, who have fought against any kind of student charge.

Jeff Rooker, shadow deputy leader of the House of Commons, who was sacked as further and higher education spokesman last year over his consultation paper on further and higher education funding, described Mr Blunkett's remarks on graduate tax as "a careless use of language. It was pure ignorance. It was quite clear he said it without thinking the whole thing through". Mr Rooker's own paper did not use the term.