Universities have been urged to abandon the notion of "third-stream" activity and become civic institutions that work with local communities in everyday teaching and research.
John Goddard, emeritus professor of regional development studies at Newcastle University, adds that funding should be overhauled to force institutions to change.
In an essay for the National Endowment for Science, Technology and the Arts (Nesta), he points to a long history of UK civic universities that started out with a local focus.
And he argues that civic engagement should no longer be seen as a "Cinderella" activity, subordinated to other areas of university life.
Professor Goddard cites Newcastle as an example of a university that has successfully engaged with its home city. It increased the proportion of undergraduates recruited locally by 87 per cent between 1996 and 2006.
He argues that what has become known as "third stream" - activities falling outside the realms of teaching and research, including local engagement - should not be treated as a separate endeavour.
"A lot of academics are in the academy because to a degree they feel they have some wider obligation to civil society," he says.
"They are publicly funded. They could go out and earn more in other fields, but there is a depth in the academy and a sense of public duty and we're not unlocking that."
His essay argues that government funding should be reorganised to ensure that universities make local engagement a priority.
"We need to be thinking about moving away from entirely formula-based funding. We need to be thinking about funding some elements by mission," he says.
"If there was a clear recognition that civic engagement was part of the core mission of the institution and appropriate resources were there, it would do it."
Professor Goddard acknowledges the danger that the research elite could shun the idea, leaving civic engagement to newer universities. This would be a mistake, he adds.
Steve West, vice-chancellor of the University of the West of England, said Professor Goddard's arguments were "absolutely spot on".
"All universities have a civic responsibility to engage with local communities and the wider public to ensure that people see what they can offer," he said.
"The idea of the ivory tower that nobody can get into is not right for modern society."
But he added that it was too early to consider changes to funding, adding that universities "have to get their houses in order first".
Kathy Sykes, professor of sciences and society at the University of Bristol, said third-stream activity was too often viewed as third-class work because the rewards to academics were less obvious than in other areas, such as research.
"Often there is a culture that unless you publish and only publish, you're putting your career at risk," she said. "If academics do extra work in fields of practice, it's harder for that work to be valued."