Thirty-six universities are among 50 higher education providers bidding for a share of up to Pounds 10 million from the University for Industry, it emerged this week.
The group includes 12 "old" universities and 24 former polytechnics, along with ten colleges of higher education and four "mixed economy" colleges in the further education sector.
UfI chiefs said they were pleased with this response to their invitation in April for bids for some of the ring-fenced funding for 5,000 full-time equivalent UfI learners on higher education courses, available from September.
The identity of the bidding institutions will not be revealed until decisions on bids are made in August. The money is only for English institutions: more UfI funding will be announced soon for Wales and Northern Ireland.
The news comes as UfI bosses prepare for a promotion campaign in the run-up to an autumn launch that will seek to clarify the organisation's identity and role.
The campaign will endeavour to replace the University for Industry name in the public mind with "learndirect" - the trademark brand for UfI's learning services.
Helen Milner, UfI director of distributed learning, told The THES: "At the moment most of our publicity work is aimed at stakeholders. But if people are going to hear of us they will hear of learndirect. We hope consumers will almost never hear of UfI."
Universities are expected to play a key role in developing on-line delivery of learning materials, as well as helping to build continuing professional development, access courses and work-based learning into the UfI's learning "matrix". They may also be interested in putting their teaching staff on programmes in online tutoring and design of online learning materials, which were among the first 250 learn-direct courses announced last month.
Higher education institutions have been asked to indicate how they wish to be involved; which subject areas they want to work in; how many student places they want to bid for; and whether they wish to form a consortium to offer credit ratings for UfI learning or prefer UfI to use a validation service to identify generic learning "units" that can be awarded credit.
Ms Milner said: "There is a real opportunity here for higher and further education institutions to increase their numbers and expand their range of virtual learning provision, because the government is very serious about making the funds available."