Students with places at oversubscribed medical schools in England are being asked to move to a course at a university elsewhere in the country in exchange for GBP10,000 after a surge in applications was followed by hundreds more students than expected meeting their grade offers.

If not enough students choose to move, some of them may be asked to defer the year by their university. The move is expected to affect about a third of Engalnd’s 33 medical schools.

Prof Malcolm Reed, co-chair of the Medical Schools Council, which is handling the scheme, said that applications to medicine courses had risen by 20%, with many more applicants receiving the grades required to meet their offers than originally forecast.

“Medical schools recognise the need to bolster the future NHS workforce and by supporting this brokerage programme have committed to ensuring that expansion considers the need to maintain high quality medical education and training for all future doctors,” he said.

There is a cap on the number of students that medical schools can recruit based on how many clinical placements local hospitals can offer. The MSC said that some of the most popular schools are located in areas which do not have the facilities to offer any further placements.

Although final details on how the payment scheme will work are yet to be determined, the MSC said the GBP10,000 grant would be split between the government, which will provide GBP6,500, and the oversubscribed university, which will pay GBP3,500.

The offer is available to all UK students holding an offer at an oversubscribed English medical school.

The government has agreed to fund hundreds of extra medical placements this year to accommodate some of the overshoot, however Katie Petty-Saphon, MSC chief executive, said this would not cover all the students who have met their offer conditions.

For students who choose not to move to another institution, or who find that their preferred alternative is already full by the time they accept, the university at which they hold an offer will determine how to handle any overshoot on their courses, she said. This may involve asking some students to defer their studies until next year, possibly using financial incentives.

Petty-Saphon said the “fewer than 10” oversubscribed medical schools were mostly located in larger cities, and not all were at selective Russell Group institutions.

She added that Exeter University had opted out of the scheme because it had implemented an alternative, which offers a year’s free accommodation and a bursary of GBP10,000 to medical students who agree to defer their studies for a year. No other oversubscribed university has opted out.

Last week, the Guardian learned that the Department for Education had approached medical schools in England before A-level results day, asking them to take applicants from heavily oversubscribed courses elsewhere in the country.

The University of Central Lancashire, which has a new medical school which took on its first UK students in 2017, is understood to be one of the institutions with available space for students from oversubscribed rivals.

Higher education sources have said that the government only plans to fund 250 additional places at medical schools. In 2019 there were 8,340 places taken and the government had already announced an extra 450 for this year.

However the DfE said around 9,000 places could be made available in total, depending on universities’ capacity to expand and the availability of clinical placements.

Hundreds of students were asked to delay starting medical school last year after A-level grade inflation, which means they are also taking up spaces on courses starting in autumn.

Predictions of grade inflation were borne out on A-level results day when nearly 45% of A-level entries across the UK achieved top A or A* grades this year after traditional exams were replaced with teacher-assessed grades.

All health courses have proven extremely popular with students thanks to the increased prominence of healthcare professions during the pandemic. The University and College Admissions Service has reported an 8% increase in acceptances to nursing courses this year.

Several universities have told the Guardian that although in most years lots of spaces on nursing courses are available in clearing, this year there will be very few or no places left.