Edinburgh will have a new university by 2006, according to the principal of the city's Queen Margaret University College, Tony Cohen.
There has been past speculation that QMUC might seek university status through merger but Professor Cohen confirmed the institution will seek the prestigious title in its own right.
He said: "You don't just merge for the sake of merging and reducing the number of institutions. I believe there is a compelling case to be made for a small, very focused university in the sector."
While English institutions can bid to become teaching-only universities, Scottish ministers insist that all higher education institutions must carry out research. But Professor Cohen said that Scottish institutions were developing innovative approaches to boost their credentials.
QMUC, with 3,750 students (14 per cent from overseas), specialises in health and social sciences, drama and business.
Scottish institutions are discussing research collaboration in five disciplines, which could lead to pan-Scottish submissions to the research assessment exercise.
"The research pooling initiative is an act of unusual enlightenment," Professor Cohen said. "I don't think institutions are yet responding adequately to it and it is down to us to put up new subjects and new pools.
I can perfectly well see why people think there should be concentrations in areas which are hugely expensive, but this is better achieved by pooling and collaboration than by deprivation and exclusion."
QMUC, which won the right to confer its own research degrees in 1998, already leads the Centre for Integrated Healthcare Research, which investigates nursing and allied health professions with Napier and Edinburgh Universities and three National Health Service trusts.
QMUC is also set to move to a state-of-the-art campus on the outskirts of the city by 2007. The main spine of the new buildings will be a "learning and resource centre," including book stacks, study areas, video suite and internet cafe, which links to academic departments. "We are giving physical and architectural expression to the new pedagogies," Professor Cohen said.