The future shape of research funding was in doubt this week after experts threatened to withdraw their help in identifying the very best work.
Half the panel chairs in the most recent research assessment exercise say they will withdraw cooperation in any future exercise unless the government restores confidence in the system.
They seek the abolition of the new 5** rating, also dubbed 6* by the government, and the restoration of funding to 4-graded departments, where research is considered nationally excellent.
The 5** grade was created by the Higher Education Funding Council for England in response to January's white paper. Hefce rushed through the new grade for departments that had gained 5* in both the 1996 and 2001 RAEs.
For the coming year, the funding council plans to consult on new ways of identifying 5** departments. The white paper states that they should have a "critical mass" of researchers. The funding council has said it will consult panel chairs - although none has yet been contacted - along with international peer review of additional material.
But in a letter published today in The THES , 30 of the 60 panel chairs in the 2001 exercise criticise the present system as being "unjust" and producing "widespread demoralisation".
They point to the invention "after the event" of the 5** grade, which they say has "completely undermined the principles of openness, transparency and peer review created by the funding councils themselves".
The letter states: "Had we been asked, we would not have supported this approach, which has offended the academic community's sense of justice."
The protest was coordinated by Christopher Baker, research professor at the University of Manchester and chair of the applied mathematics panel, and Philip Schlesinger, director of the Stirling Media Research Institute at Stirling University and chair of the communication, cultural and media studies panel.
Professor Baker told The THES : "We were deeply impressed by the anger and disillusionment expressed by panel chairs. Our letter is an indication of a growing crisis of morale.
"The government's thinking has to change, and so does that of Hefce. You do not sustain world-class research by killing off the sources of academic creativity, which the current policy of excessive selectivity is destined to do."
A Hefce spokesman said: "The proposal to identify the very best of the 5* departments is in the white paper. We are working on options for implementation and will expect to ask panel chairs for their comments. We want to talk to them and get their views."
Of the 30 panel chairs, 13 are from Russell Group institutions, 13 from other old universities and four from new universities. With the exception of applied maths and some engineering, they represent subjects mostly outside the physical sciences.