Students from poor backgrounds in London’s East End are being urged not to give up in their ambitions to go to university because of cuts to government grants.

Hundreds are being advised to apply for grants in a new scheme being set up by the local authority on Monday to help ease the cost of going to university.

Grants of £1,500 each are being made available from Tower Hamlets council for up to 400 youngsters who are starting higher education in September.

The Mayor’s Higher Education Award scheme which opens 9am on Monday is the first grant programme in the country on this scale, designed to help students from poorer backgrounds.

“For teenagers who thought university was a pipe dream, I hope this scheme will change their minds,” said Mayor Lutfur Rahman.

“There are 400 grants available—but we expect fierce competition and don’t want anyone to miss out because they missed the deadline.”

Students need to be 24 or under to qualify and to have lived in Tower Hamlets at least three years, as well as be accepted for the first year of a designated undergraduate course for which they would be eligible for a full fee loan. Applications can be made up to October 11.

The scheme is aimed to reduce the numbers dropping out of higher education because of living costs and to encourage more East End school-leavers to go onto university.

Cabinet member Oliur Rahman said: “We are committing of £1.26 million to this investment in the future.”

Currently only one-in-three Tower Hamlets school-leavers goes on to higher education, around 3,000, with only 800 of these going to university.

The new scheme follows the Mayor’s Education Award now in its third year, in which school-leavers get grants to help stay in education, filling a gap after the government abolished the £30 weekly Maintenance grants in 2011.