The government is in danger of "restricting" higher education by concentrating most research among just a few universities, vice-chancellors have warned.
Some universities will not 'meet expectations', say vice-chancellors
This, they say, will "force" too much specialism, as some institutions are expected to offer only teaching.
These could then fail to meet expectations, both nationally and locally, added Universities UK, which represents vice-chancellors.
Its president, Professor Roderick Floud, said of: "The danger is that mechanisms will be put in place which force institutions down certain routes, rather than be free to decide their own futures in the best interests of their students, their staff, their communities, and their local economies."
In the white paper on higher education, published in January, the government announced a £1.25bn increase in university research funding by 2005-6.
This amounts to about 30% increase in real terms.
Most of it will go to the 55% of departments classified as nationally or internationally excellent in the 2001 Research Assessment Exercise.
The government claims this will encourage research in larger units and lead to more collaboration.
But many in higher education regard this as divisive, effectively removing the research role of some universities and creating a "two-tier" system.
A Universities UK spokesman said: "We believe this will lead to a stratified, fragmented sector, unable to meet expectations as to how it has to operate in the public interest regionally, nationally and internationally."