The university says it wants to protect the "student ecperience"
The University of Gloucestershire is to close one of its campuses and is pulling out of a move to a new site.
Its Pittville campus in Cheltenham, currently home to the Faculty of Media, Art and Communications, will shut by the end of 2011.
The university also says it will not be moving into the Blackfriars development in Gloucester.
Vice-Chancellor, Professor Patricia Broadfoot said funding cuts and a cap on student numbers were responsible.
She said: "This means universities up and down the country cannot anticipate any growth in their income and we are experiencing significant cuts in our funding from the Higher Education Funding Council [for England].
"Clearly we have to get our house in order and make the ship ready for the storm."
The university says campuses and courses are a priority to protect the "student experience".
It claimed that by rationalising its estates it can become a leaner operation.
Prof Broadfoot added: "We will sell our London campus which costs about £1m a year to run and is not core to our mission to be the university for Gloucestershire.
"We will consolidate our Cheltenham operation on two sites.
She added: "Losing our presence at Blackfriars is a big blow."
The university operates at The Park, Pittville and Francis Close Hall in Cheltenham, and Oxstalls in Gloucester.