MPs are to grill higher education funding chiefs over whether they should have intervened earlier to rescue the ill-fated e-university project - as a leading expert questions the value of the venture.
The House of Commons education select committee is to investigate the collapse of the £62 million venture, launched with much fanfare by David Blunkett, the former education secretary, in 2000.
Barry Sheerman, chair of the education committee, said the committee would seek to establish if the Higher Education Funding Council for England should have acted earlier to avoid the problems that beset the online project.
The e-university, named UKeU, was intended to market and deliver UK degree courses across the world via the internet.
But despite the large sums of public money invested, only 900 students enrolled, missing the modest initial target of 5,600.
It has now come to light that a number of experts warned officials at UKeU that the initiative was in trouble as long as two years ago.
Steve Molyneux, director of Wolverhampton University's Learning Lab and an e-learning expert, said: "I was told to keep quiet. They didn't listen and closed ranks."
Professor Molyneux added that the e-learning platform still did not work properly and was of questionable value.
He said the £35 million squandered on the venture cast a shadow over other public-sector e-learning initiatives such as the National Health Service University.
Professor Molyneux welcomed the inquiry: "They need to get an independent group to look at what went wrong, from the business plan through to delivery, so that other public sector e-learning initiatives can learn from these mistakes."
Meanwhile, the Open University is on the shortlist of bidders for different parts of the venture, which is being shut down and sold off by the funding council. The council's board will meet on Thursday to consider a list of bidders for UKeU. A Hefce spokesman said there had been "a number of expressions of interest" for UKeU, the holding company, but was he was unable to say how many formal bids had been submitted.
The £3 million e-China programme and the e-Learning Research Centre are both expected to be taken over by a university, while the OU is thought to be interested in some of UKeU's staff.
But the OU is unlikely to buy the e-learning platform created at a cost of as much as £20 million by Sun Microsystems.
Problems associated with the platform were first highlighted during the venture after the OU and the University of London's external studies department decided against using the technology. This prompted John Slater, the interim director and a former professor of computer studies at Kent University, to argue for a switch to a proprietary system such as Blackboard or WebCT. But his advice was ignored and he subsequently resigned.
The first courses were not launched until September 2003 and two months later Hefce sent in consultants.
The report by PA Consulting questions the strategy of offering universities an integrated service that includes help to create online courses, as well as deliver and market them abroad. "Our discussions with universities have suggested that they regard the e-university as primarily a marketing vehicle," the consultants wrote.