The government has announced 10,000 more university places will be available this autumn for students to study science, technology, engineering and maths (STEM) subjects.

The places will be paid for by cutting existing budgets and reducing student loan repayment holidays from five years to two.

Latest application figures from the admissions service Ucas showed a rise across the board in people applying to take degrees in STEM subjects, with an 11 per cent rise in those applying for maths degrees and 19 per cent more applying to study mechanical engineering.

Wider demand for university places continues to rise, with 10 per cent more applicants this year than last across the UK - about 50,000 people.

Business secretary Lord Mandelson said: "By making available 10,000 extra places in science, technology and maths we are not only helping more individuals with the ambition and ability to go to university but also investing in this country's future."

The funding the government will provide will cover students' maintenance grants and their loans for tuition fees.

Susan Anderson, director of education and skills at employer's organisation the CBI welcomed the move but said maintaining the quality of degree courses was vital.

"It's good to see government investing in the skills of the future – science, technology, engineering and maths. We'll need more of these when the upturn comes," she said.

"Demand from businesses for STEM graduates is only set to grow over the coming years, as the UK draws more heavily on innovation and technology for jobs, growth and global competitiveness."