Gloucestershire University, which has formal links with the Church of England, has dropped theology from its undergraduate course offerings.
The move comes despite its status as the highest-rated new university for theology and religious studies in The Times Good University Guide 2004 . It was the only one in the top 20.
Gloucestershire, whose chancellor is Lord Carey, the former Archbishop of Canterbury, was formed from two church colleges and its mission statement includes the term "Christian but not exclusive".
University registrar Peter Griffiths said the decision was part of a revamp of the academic portfolio that saw 15 subjects discontinued in favour of more popular disciplines such as biology and photojournalism.
"It was quite contentious because of the university's background as a Christian institution but the decision was about the viability of the course, not the quality, because it has always been very high," he said.
Theology and religious studies at Gloucestershire dropped only one point in its 2000-01 teaching quality assessment, equal to departments in universities such as Cambridge, Birmingham and Leeds.
But Mr Griffiths said that, while the 2002 target for first-year undergraduates in theology and religious studies was 44 students, only 22 applications were received.
"We just cannot keep going with that number," he said.
The decision to axe theology was taken shortly before Lord Carey's installation as chancellor in October last year.
Mr Griffiths said Lord Carey, who could not be contacted, was aware of the decision to drop theology and religious studies.