Oxford, Cambridge and other British universities say government plans to cut hundreds of millions of pounds from their funding would put their world-class reputations in jeopardy.
Unlike most elite institutions in the United States, Britain's top schools rely almost exclusively on taxpayers keeping them going.
But strapped for cash, the government has slashed its higher education budget by 600 million pounds (nearly $A1.07 billion) over the next three years - a figure British media say comes to a 12 per cent reduction when combined with other cuts.
British universities have little chance of raising big funds on their own, with student fees by law capped at about 4,000 pounds a year, and endowments generally are no more than modest.
The Russel Group, representing 20 leading research universities, said the cuts would have "a devastating effect, not only on students and staff, but also on Britain's international competitiveness, economy and ability to recover from recession".
"It has taken more than 800 years to create one of the world's greatest education systems, and it looks like it will take just six months to bring it to its knees," according to an editorial by the group's Chairman Michael Arthur and Director Wendy Platt, published in The Guardian newspaper.
In defending its decision, the government noted that higher education funding had risen by 25 per cent since 1997.
Higher Education Minister David Lammy said now was time "to look to the higher education sector to tighten its belt."
(www.eduwo.com, Anna)