By Hannah Richardson
BBC News education reporter
Universities have warned they will not have enough places
England's university budgets are being cut by £449m, leading student places to be reduced by an estimated 6,000 in the next academic year.
Teaching budgets are being reduced by £215m, a cut in real terms of 1.6% on 2009-10 levels, says the Higher Education Funding Council for England.
Research funding is being frozen, while the buildings budget is cut by 15%.
Student leaders say this "amounts to national self-harm" - while ministers say universities are "scaremongering".
National Union of Students leader, Wes Streeting, says the cuts threaten "irreversible damage" to higher education.
"In spite of protestations to the contrary, the cuts being imposed by the government are going to hit teaching, research and the number of places available at a time of record demand," said Mr Streeting.
SPENDING ON UNIVERSITIES
United States 1%
Source: OECD, public spending on higher education as percentage of GDP. Most recent figures 2006.
"Singling out universities for cuts of this kind seems to me to be an extraordinary act of self harm by the government."
Funding council chief executive, Sir Alan Langlands, said these were "testing times", but that higher education had seen substantial growth over the past decade.
But his statisticians estimate the funding package translates to a reduction in student places in England of about 6,000 on 2009-10 levels.
The pressures come as universities face unprecedented demand for places - with some institutions reporting increases in applications of more than 20%.
Steve Smith, president of vice-chancellors' group Universities UK, has warned that more than 200,000 applicants could be left without a place this summer.
Professor Smith said the funding details "indicate that the cuts are even deeper than expected".
HAVE YOUR SAY
This is wasting talent needed for an efficient and successful economy and it's extremely short-sighted.
The biggest saving will be in teaching - with next year's allocation of £4.7bn representing a decrease of 1.6% in real terms, compared with this year and nearly 5% less than what had been expected.
Research spending has been maintained - with £1.6bn to be allocated next year.
Capital spending will be £562m, a reduction of almost 15%.
Universities are expected to receive their individual budgets next month.
The biggest rises in applications have been reported by new universities - and Pam Tatlow, chief executive of their representative group, Million+, has highlighted the concerns about the limit on places.
"It's not just that we're being capped at this level, but it's the fact that demand has risen because of the recession and the number of 18-year-olds has gone up," she said.
Paul Marshall of the 1994 Group of research intensive universities said the funding cuts seemed "incompatible" with the government's ambitions for higher education.
Speaking for the Russell Group of leading universities, Wendy Piatt, said there was a recognition "that universities will have to bear their fair share of any cuts".
But she said that after this "belt tightening" the government needed "to confirm that there will be no further cuts".
Higher Education Minister for England, Mr Lammy, said "there will be a minimal impact on teaching and students. No further savings were announced and the bulk of the savings will come from a reduction in capital spend".
Any pressures on spending should be seen against the background of a long-term increase in student numbers, he says - with "more students than ever before in our history".
"These savings come against a background of record government investment in higher education - around 25% more than 1997."
Liberal Democrat universities spokesman Stephen Williams said the government's target to get half of young people into university was proving to be "empty rhetoric" and that record numbers of bright young people would be turned away this summer.
These funding proposals apply to England - but there are other funding changes ahead elsewhere.
In Northern Ireland, there is to be an increase in recurrent funding - but a cut in capital spending.
The Scottish Funding Council is to announce its budget for universities in March.
In Wales, the funding council has been asked to provide details of actions, measures and timelines for delivering a review of higher education in Wales by spring 2010.