Higher education minister Margaret Hodge has ordered an investigation into vice-chancellors' pay.
A survey by The THES , published a fortnight ago, identified that the highest-paid vice-chancellors received large boosts to their incomes in the year in which they left office. In some cases, their incomes doubled.
The investigation will cover severance payments. The Higher Education Funding Council for England issued guidelines on these payments in 1997, based on a report by the Committee of Public Accounts on severance payments to senior staff in the publicly funded education sector published in June 1995.
The guidance was intended to ensure that governing bodies and their remuneration committees reached settlements that could be justified.
Ms Hodge said: "Vice-chancellors are doing an excellent job making sure our universities remain competitive centres of education, research and innovation.
"However, I share the concerns about some of the apparently large rises and have asked Hefce to assure me that the guidance issued in 1997 is being properly followed."
Sally Hunt, assistant general secretary of the Association of University Teachers, said that Hefce needed to act swiftly to end public cynicism about pay deals.
Tom Wilson, head of the universities department at lecturers' union Natfhe, last week wrote to the Public Accounts Committee asking it to investigate vice-chancellors' pay. He said that low-paid university staff deserved answers.
Sir John Daniel, former vice-chancellor of the Open University, topped The THES 's table with earnings of £309,000 pro rata, more than double the amount he had earned the previous year.
But a spokesman for the Open University said that the guidelines did not apply as Sir John did not receive a severance payment.
Sir John Kingman, former vice-chancellor of the University of Bristol, also doubled his pay to £252,000, which included £122,000 compensation for loss of office.
A spokesman for Bristol said: "Sir John Kingman received one-off compensation for loss of office. The university is entirely confident that Hefce guidance was followed, and it would be happy to help Hefce with its response to the minister."
At the University of East London, former vice-chancellor Frank Gould earned £189,000. This included £58,000 compensation for loss of office. A spokesman declined to comment.
At South Bank University, former vice-chancellor Gerry Bernbaum received a 13.2 per cent pay rise taking his earnings to £137,000. A spokesman said that Professor Bernbaum "did not lose office nor was subject in any sense to early termination, early retirement or severance".
The compensation for loss of office quoted in The THES related to payments to several senior members of staff who left as a result of restructuring at the end of last year.
Rob Withers, former principal of University College Scarborough, received £402,000 when he lost his job after the college merged with the University of Hull last year, up from £84,200 he earned the previous year.
Sue Truefitt, the former chairman of the governors at the college, said:
"It was not an excessive package. I discussed it with Hefce beforehand. A lot of the figure represents pension contributions."
The funding council guidelines state that institutions should bear in mind the principles established by the Committee on Standards in Public Life when arranging severance payments, including openness.
The guidelines add: "If the council concludes that there has been a misuse of public funds, it is prepared to use all the powers at its disposal to rectify the situation."