This paper presents a qualitative, high-quality State-of-the-Art (SotA) extended literature review on integrating ChatGPT, an advanced and contemporary natural language processing model, a sophisticated AI-powered chatbot that OpenAI developed in higher education. Snyder (2019, p.1) emphasised that "a literature review as a research method is more relevant than ever”. According to Barry et al (2022, p. 663), "the fundamental purpose of SotA literature review is to create a 3-part argument about the state of knowledge for a specific phenomenon: This is where we are now. This is how we got here. This is where we could go next”. This 3-part argument will underpin this study. With the rapid advancement of artificial intelligence (AI) and its potential to transform various sectors, including education, integrating AI-powered tools like ChatGPT to enhance teaching and learning has become a topic of significant interest. This study explores the diverse applications of ChatGPT in higher education, including pedagogical practices, student engagement, intelligent tutoring systems, personalised learning, language learning support, academic research, feedback, grading, and administrative support. Additionally, it identifies the challenges and ethical concerns this technology poses, focusing on bias, privacy, data security, reliability, accountability, accuracy and the balance between human interaction and artificial intelligence. Analysing the literature on ChatGPT’s role in higher education presents future directions for implementing it in higher education settings, ushering in an era of exciting possibilities. The research concludes that higher education institutions should provide clear and transparent guidelines for their staff and students on using ChatGPT responsibly for academic purposes to mitigate any ethical concerns.