Jim Wallace, Scotland's lifelong learning minister, may ditch controversial proposals that many fear would create a two-tier university system north of the border.
He told The Times Higher there was no intention of "diluting" the university sector or of following England's lead in creating teaching-only universities.
Draft legislation to merge the further and higher education funding councils reclassifies universities and colleges as specific tertiary education providers (Steps) in four different categories. This would split pre and post-1992 universities, with the latter grouped with non-university higher education institutions.
Universities have condemned the move. Sir Alan Langlands, principal of Dundee University, called it "risible" and confusing.
But Mr Wallace said: "I wouldn't lose any sleep if the view came back to us that this was unhelpful." Steps was a convenient shorthand classification, he said. The four categories, which also split incorporated and non-incorporated colleges, were simply a reflection of the legal position of different institutions.
Both universities and colleges have warned against blurring the distinction between further and higher education, and Mr Wallace said he wanted to reinforce their differences.
But, he said, merging the funding councils would allow for a more integrated view of lifelong learning. A single strategic organisation would help achieve parity of esteem between different types of learning and institution.
He attempted to allay fears that powers to designate "other providers" of education could lead to encroachment by private companies - the Scottish Further Education Funding Council already has scope to buy in provision that mainstream colleges cannot supply.
But Mr Wallace sidestepped the contentious issue of whether courses at the same level of the Scottish Credit and Qualifications Framework should attract equivalent funding.
Colleges complain that they receive far less for higher national diplomas and certificate courses rated at the same level as the first and second years of degree courses. He said: "I don't think it's for ministers to work out. It's the role of the funding council. That's why we're setting up a body to look at the totality."