University chiefs have told the House of Lords their institutions put £45bn into the UK economy and deserve continued strong investment.
University chiefs are pressing for more investment
In a debate, vice-chancellors have said universities are vital to the economy.
They said the sector supported 580,000 jobs and brought in £3.6bn income from international students alone.
Universities are trying to secure funds from the summer spending review.
Lady Warwick, the chief executive of Universities UK, which represents university vice-chancellors, acknowledged that finances had improved since the turn of the century.
But she said that universities still needed a good level of central funding despite the introduction of variable tuition fees.
She said universities were at the forefront of tackling many of the UK's long-term challenges.
"Our world class research departments in both the social sciences and the sciences are essential to combating and understanding the threat of global conflict and terrorism.
"With regard to our ageing population, higher education has a key role in equipping the UK workforce to be more productive for longer; and finally universities are at the forefront of the green agenda," she said.
In a speech to the Higher Education Funding Council for England (Hefce) on Wednesday, Education Secretary Alan Johnson said the country needed its world class higher education system more than ever.
"England's universities have always played a vital role in shaping our country's role in the world," he said.
"They are a source of national pride and international envy."
But England's historic eminence in higher education did not come with a life-time guarantee and hard work was needed to ensure the universities remained world class.
"If we don't, our economy will suffer and we will lose our share of the growing market of 100 million overseas students worldwide," he said.
It was vital to press ahead with efforts to encourage children from poorer backgrounds to go to university and this had to start at a young age.
Mr Johnson also said efforts should also continue to develop new ways of delivering higher education, with more virtual institutions.