Plans to axe PhD funding to departments that did badly in the research assessment exercise are being reconsidered by the funding councils following an outcry from some post-1992 universities.
In a rare move, the funding councils this week appealed for initial responses to their proposals, in the interests of openness, before a full consultation starts in April.
The initial consultation suggests that several conditions be met before a department receives public money for PhD students but leaves a query over whether these should include a high RAE rating.
The funding councils had previously suggested that to have publicly funded PhD students a department would have to gain at least a 3a or above in the RAE, indicating that its research is nationally excellent in more than two-thirds of the areas assessed.
Such a move would allow departments to pursue a "core plus" model, under which all institutions would engage in research but only some would specialise in it. It would further concentrate PhD places. At present, five institutions award a quarter of all doctorates. The remaining doctorates are awarded by more than 100 institutions.
More than 400 departments would be affected. The decision would particularly hit subjects such as environmental science and nursing, where almost half of all departments would lose funding for PhDs.
Leslie Wagner, vice-chancellor of Leeds Metropolitan University, said: "The intention is clear. The government won't seek to take research degree-awarding powers away from some universities, they'll just make it impossible for them to exercise those powers by raising barriers to participation.
"One way of looking at this policy is as a protectionist measure for the bigger research institutions to deter new entrants. It's a classic anti-competitive strategy."
Peter Knight, vice-chancellor of the University of Central England, said:
"The Higher Education Funding Council for England has better things to do than interfere in areas where it has neither competence nor a coherent policy.
"Hefce is not in a position to make assumptions about the quality of academic supervision. It assumes that only RAE money counts: there's money from a variety of sources to support PhDs, and if we can get money other than government funding, then we should.
"By eliminating departments rated 3b, they are saying that units with significant national excellence should not be allowed to get funding for research, and that's short-sighted. This maintains the tradition that all PhDs are full time and ignores the fact that many students pursue PhDs part time and need to study locally."
Responses to the initial consultation are due by March 14.