Proposals that would give funding chiefs the power to oust vice-chancellors have been negatively received by the sector.
The Higher Education Funding Council for England has proposed changes to the "financial memorandum" - the funding agreement between Hefce and universities.
As Times Higher Education has reported, a draft version of the plans suggests that the "designated officer" responsible for ensuring that the terms of the funding agreement are met - usually the vice-chancellor - should be renamed the "accountable officer".
"In exceptional circumstances, if in Hefce's view the accountable officer cannot be relied upon, Hefce will explain its reasons and require the governing body to take steps to rectify the position," the consultation document says.
In such circumstances, "the governing body will need either to appoint a new head of institution or seek Hefce's exceptional agreement to its accountable officer being an officer other than its head of institution", it adds.
A summary of the proposed changes, which follow last year's stand-off between funding chiefs and London Metropolitan University, also refers to Hefce's right to reject an individual's nomination as accountable officer.
In its response, the 1994 Group of smaller research-intensive universities takes issue with the plans, arguing that Hefce's existing powers of intervention are adequate.
"Changing the term to 'accountable officer' suggests the person in question is in some way accountable to Hefce, which they are not," it says.
The right of rejection could have serious implications for university autonomy, it adds, and questions how Hefce would decide whether a nominee is "fit" or not.
"It is hard to imagine that Hefce would have access to more information than an institution's selection panel," it says.
The response also rejects a proposal for university governors to explicitly assure academic standards, an area already overseen by the Quality Assurance Agency.
The group's response says: "The draft document makes no attempt to explain why Hefce believes this proposal is required and appears to add nothing to already well-understood responsibilities."
Million+, which represents new universities, called the proposals a "heavy-handed and disproportionate response to an isolated event" - namely the London Met crisis.
London Met's vice-chancellor, Brian Roper, and its lay governors were forced from office by Hefce after a long-running wrangle over student-data inaccuracies.
Pam Tatlow, chief executive of Million+, said the London Met affair "might have been averted by clearer channels of communication between the funding council and the institution". She added that the powers proposed by Hefce would "fundamentally undermine the role, purpose and function of university governance".
Universities UK declined to make its response public, but a source said that a document circulated to some members made points similar to those in the 1994 Group response.
A Hefce spokesman said: "We have had 123 responses to the consultation and are revising our proposals in the light of these. We will be taking a revised draft to our board meeting in May."
The new agreement will be published following the meeting and would take effect on 1 August, he added.