Five-star departments would be abolished and replaced with a peer review of all staff under the Royal Society's plans to reform research assessment.
The Royal Society proposes that subject areas should be judged in a holistic manner, with all members of academic staff included. The judging panel would then allocate each member of staff to one of three categories: international; national; and sub-national or not research active.
The categories would be weighted so, for example, an academic deemed international would attract £5,000 in funding, while those deemed national would attract £2,000 each.
The scheme would abolish the 5* rating for departments and would replace it with a claim that 95 per cent of a department's staff were international researchers.
John Enderby, vice-president of the Royal Society, said: "Under the current system, there is tremendous pressure for institutions to remove those staff they perceive as weak from their research assessment exercise submission. This is having a corrosive effect on morale in universities and leads to a lack of motivation and unity in departments.
"Imagine how demotivating it must be for a younger researcher, just breaking into the field, to be told that he or she is not being put forward for the RAE because of not making the right departmental grade. It hardly says much for the scientific community," he said.
The Royal Society was responding to the review of research assessment being conducted by Sir Gareth Roberts, president of Wolfson College, Oxford, on behalf of the funding councils. The steering group met this week to decide on a range of options for research assessment to go to consultation next year.
The Universities Association for Continuing Education also responded to the review. It called for a proportion of research funding to be allocated to institutions that specialised in innovative teaching and development, particularly in widening participation.
In a joint submission, the Institute for Learning and Teaching and the Leaning and Teaching Support Network called for research assessment to encourage synergies with learning and teaching. They called for research assessment to include criteria requiring submissions to demonstrate how they linked research and teaching.