The plans have been approved by the Higher Education Funding Council for England (Hefce).
Mr Willetts was speaking at the annual conference of the funding body for England's universities, Hefce.
"Hefce stands ready to assist in realising the proposals when they are fully formulated, " Sir Brian said.
The Hefce report refers to higher education transforming people's lives and being 'one of the nation's most valuable assets.
The Higher Education Funding Council for England (Hefce) funds teaching and research in universities and colleges in England.
Hefce said it would be a "dynamic new way of delivering high quality higher education to students via the internet".
BBC: NEWS | UK | Education | Problems at e-learning university
But the HEFCE currently forecasts that the share of income coming from oversees fees will rise to 12.5% of total income by the 2013-14 academic year.
Hefce would bring forward proposals for the new "virtual" venture.
BBC: NEWS | UK | Education | Problems at e-learning university
Responding to last year's under-recruitment and in a bid to give universities more confidence in offering places, the Hefce funding council is allowing universities a wider margin for over-recruiting, before they face financial penalties.
Mr Willetts told delegates he wanted Hefce to look at ways of making the system more "flexible" so a popular university might be given extra places while those that are under-subscribed will have their numbers cut.
The Higher Education Funding Council (Hefce) says it is aware of this incident and believes it to be authentic - and says it takes this "very seriously" - but that it does not invalidate the overall results of the survey.
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