Funding for teaching and research will rise by an inflation-beating 5.3 per cent in Scottish universities and colleges next year.
The Scottish Higher Education Funding Council hailed the increase as the fourth consecutive annual real-terms rise for teaching and research in Scotland.
The £745 million total for teaching and research in 2004-05 has come within an overall higher education allocation of more than £800 million, a rise of 5.5 per cent.
The bulk of the rise for Scottish institutions is earmarked for research, with the main quality research grant, which is based on success in the research assessment exercise, going up by 10.5 per cent.
A key winner is Edinburgh University, which will see its research grant rise from £43 million this year to almost £48 million next year, an increase of more than 11 per cent.
Shefc has also significantly increased funds to support knowledge transfer, from £6.5 million to £9.5 million.
Its pioneering techniques, which were highlighted in the Lambert report into the collaboration between higher education and business, mean that knowledge-transfer work and the financial rewards for that work will no longer simply go to the institutions that have done well in the RAE, as has happened until now.
Consequently, increases in the knowledge-transfer grants to the weaker research institutions, such as the universities of Napier, Paisley, Abertay and the UHI Millennium Institute, will be greater than increases to research-intensive universities such as Edinburgh.
Shefc will also boost its research development foundation grant by 10 per cent to £2.75 million. This funding supports emerging areas of research.
In addition, the council has earmarked £10 million for strategic research development, to back projects that support national economic, social, healthcare and educational priorities.
Funding for teaching will rise by 3.4 per cent, with Shefc keeping its student numbers steady.
But the education department is funding 1,100 initial teacher education places at a cost of £5.8 million, while the health department is funding 65 places in professions allied to medicine.
Each of the 20 higher education institutions funded by Shefc has won above-average funding for teaching and research.
The largest increase, 17.6 per cent, goes to the UHI Millennium Institute, marking its full integration into Shefc's formula funding system.
The second biggest institutional winner is the Royal Scottish Academy of Music and Drama with 10.8 per cent. It and Scotland's two art colleges won "small specialist institution" status in 2001, which means that each will get an extra £425,000 in 2004-05.
Robert Gordon University has been awarded the lowest increase, 2.7 per cent, because of an expected clawback following its failure to achieve planned student numbers after a reorganisation of courses.
Shefc has made it clear that it has no concerns about the university's financial health.
The Open University in Scotland has also won a boost in funding - it has been awarded a rise of 6.1 per cent, primarily because of its success in widening access.
Changes in Scotland's resources for teaching and research
Shefc funding table 2003-04 to 2004-05
EVERYONE'S A WINNER
Total teaching and research resource up 6.4 per cent, with a 2.8 per cent rise in teaching and an 11 per cent rise in research cash.
Tim O'Shea, the principal, said: "We have world leadership in some research areas, and clearly we want to build on that.
"Some of the most important areas are interdisciplinary and multidisciplinary. The key example is work in clinical medicine, life science and informatics in the post-genomic era, and we're very good in all three of these.
"We see ourselves as a leading member of Scottish research collaboration.
Edinburgh has just under 60 per cent of 5*-rated research, but while there's a very large amount of research excellence in the city, it's not all exclusively here.
"My view for Scotland is that it is key to ensure that research excellence is properly funded - but that has to be done on the basis of the quality or the potential of the work, not the institutional base.
"Working collaboratively with other universities is the right thing for us to do.
"Edinburgh does very, very well in commercialisation in terms of patents, licences and new companies. This contributes to the Scottish economy."
The Royal Scottish Academy of Music and Drama
Total resource up 10.8 per cent, with a near 10 per cent rise in teaching funding and a 163 per cent rise in cash for research.
John Wallace, the principal, said: "We have small specialist institution status - our courses offer one-to-one tuition and team teaching.
"Our costs are higher - it's intensive, with students in small groups: ten in contemporary theatre practice; 12 to 15 in conventional acting.
"The performance is the academic work. There is no split into academic work and a performance at the end of term. About 80,000 people a year come to see the students perform.
"Because we have so many specialisms, we deliver them through professional practitioners coming in part time, a bit like a teaching hospital. With 650 full-time- equivalent students, we have about 900 part-time teachers.
"It's the only place of its kind in Scotland."