Many of Britain's best teacher training institutions are "teetering on the brink" of dropping the subject, according to university administrators.
The cost of running PGCE courses has risen so much that even the top university teacher education departments are losing money.
New accounting methods and a recent sector-wide risk assessment exercise have highlighted the extent to which other parts of higher education are subsidising teacher training, according to the Universities Council for the Education of Teachers (Ucet).
Institutions that are shedding loss-making activities as part of restructuring exercises under way across much of the sector are asking whether they can afford to continue offering teacher training.
Ucet has warned that if many decide to cut their losses and axe teacher training, it will worsen teacher shortages in schools.
Mary Russell, secretary of Ucet, said: "The cost of running teacher-training courses becomes more of an issue each year. Institutions have been asking whether they can afford to stay in the game.
"Most have held out so far because they feel it is a major commitment to the community. But accounts are now done in such a way that it is getting more difficult to carry anything that is not paying its way.
"As a result, some institutions are now teetering on the brink of dropping out."
Ms Russell said it was the university-based teacher training departments with the best quality ratings that were the most likely to pull out.
"They are mostly in the kinds of institutions that can afford to pull out and turn to other things," she said.
Richard Pring, director of educational studies at Oxford University, which has topped teacher-training quality league tables frequently, said the cost of running PGCE courses had become punitive even for the best departments.
He has written to the Teacher Training Agency and education secretary Estelle Morris to complain about the low levels of funding and increasing costs of administration and red tape.
Mr Pring said: "For most good-quality departments, all these costs mean that they are having to be subsidised by other activities. That is a problem that is not being faced by the government.
"Quality departments like ours are not taking on more students because teacher training is a loss-making activity. Even though we are well supported by the university and the vice-chancellor, it still creates difficulties. I know that is also the case in other universities."
Universities UK has joined forces with the Standing Conference of Principals to set up an advisory group to explore the issue this autumn. The group, chaired by Leicester University vice-chancellor Bob Burgess, will work out the cost of teacher training using an assessment method similar to the government's "transparency review" of higher education funding.
Patricia Ambrose, chief executive of Scop, said: "Teacher training has never been properly costed, and lots of institutions say they have to cross-subsidise the courses to keep them going."
Ms Ambrose said teacher training was also a "risky activity" for institutions because quality was much more closely linked to funding from the TTA. Departments with top quality ratings often refuse to expand for fear of watering down standards and suffering funding penalties as a result.
Another problem is the supply of qualified teacher training staff. Experienced teachers who might have been recruited in the past are reluctant to take a pay cut of up to £7,000 to work in a university.
Ms Russell said that although only the Institute of Education had stated publicly that it might drop teacher training, many others were thinking along the same lines but saying nothing for fear of turning their concerns into a self-fulfilling prophecy.
"The government will not know about it until they have already made a decision. If that happens, there will be serious implications for teacher supply and quality," she said.
A TTA spokesman said: "It is clear that the financial health of providers varies considerably. There is also considerable variation in their own financial policies and practices, including cross-subsidy between activities.
"It is equally clear that the concerns they raise vary considerably from provider to provider, and no single initiative would assist everyone."