Doubts were raised this week over the proposed merger between Bath University and the University of the West of England in Bristol.
Senior officials have stressed that proposals for a full amalgamation have not been tabled and that talks have produced "all sorts of other possibilities". Meanwhile, union leaders have warned of growing anxiety among academic and support staff over job security.
Last month the two vice chancellors issued a statement suggesting a merger by August 1998. But discussions between managers and staff since then appear to have taken the shine off the idea.
Rob Cuthbert, assistant vice chancellor at UWE, said: "Both vice chancellors thought there were good prospects for closer collaboration, and among those possibilities was the prospect of a merger. What has happened is that people are beginning to see there could be closer collaboration without a merger."
Mr Cuthbert said discussions were focusing on the idea of a "commonwealth", under which the universities could share resources.
David VandeLinde, vice chancellor of Bath, explained: "The word 'commonwealth' is a shorthand way of saying short of a full merger, but more than just a strategic alliance." He said the idea of a full merger was still being discussed.
A decision would be made before the summer vacation on whether sufficient progress had been made for the talks to continue, he added.
Sue Habershaw, vice chair of the Natfhe branch at UWE, said staff were still assuming a merger would go ahead, but were anxious over what such a move or any collaboration would mean for jobs and terms and conditions of employment.
"It is unclear what is being proposed. It is particularly unsettling for support staff, since the vice chancellors have said central services could be amalgamated, which seems likely to mean redundancies," she said.