Middlesex University is to position itself as a "business-facing" institution in a move described as "high risk" by the Higher Education Funding Council for England (Hefce).
The university has asked Hefce for £8 million and 1,046 extra students to "widen the institutional focus from individual learners to learners and employers, leading to a repositioning of the university towards employer engagement", according to Hefce board papers.
Hefce has recommended that its board approve the proposal, which would see employers offered customised work-based education up to doctorate level and lead to the academic accreditation of "learning already held by organisations and individuals".
Middlesex is known to have appeared on Hefce's list of institutions whose financial health is considered to be "at risk" during the past decade, although its position has improved in the past two years.
"The project carries a high level of risk because of its ambitious scale, the level of funding and the number of additional student numbers being sought," Hefce said.
Hefce has already given £8 million to Thames Valley University (TVU) for its "FutureSkills" project, which the council said was designed to bring about a similar "institutional transformation".
As part of a drive to become "the foremost employer engagement university in the UK", TVU is establishing centres in Slough and at Heathrow Airport and Park Royal industrial park, aimed at servicing employers' skills needs.
"The university has long had a reputation of benefiting students with its strong employer links," said a TVU spokesperson. "But Future-Skills will intensify and broaden these so that every student will know that if they study at TVU they will benefit from a curriculum that has been designed with and, in part, delivered by employers."
The two universities must not target overlapping areas of London when seeking to engage with business, Hefce warned.
The University and College Union (UCU) has sounded a note of caution over universities' increasing involvement with business. In its response to a government consultation on higher education at work, the union said it was concerned about attempts to re-engineer whole institutions, including the academic workforce, along business-facing lines.
"While UCU members are happy to collaborate with employers in their role as researchers, lecturers, computing staff, librarians and administrators, they did not enter academia to generate profits for private companies. We are concerned that the 'business facing' agenda seeks to turn universities (and therefore their staff) into the teaching and research arm of employers."