The European Commission wants European Union member states to guarantee medium and long-term university funding and to spend more of their education budgets on higher education.
It is also seeking an end to the patchwork of scholarships, fellowships, short-term contracts and periods of tenure described in research released last week at a commission conference on preparing universities for 2020.
Philippe Busquin, commissioner for research, told the meeting in Liège, Belgium: "We can no longer count on our haphazard funding of universities."
But a lack of academic mobility remains a big obstacle to the target of spending 3 per cent of gross domestic product on research and development, according to Lesley Wilson, the chief executive of the European University Association.
She said mobility had not increased because governments had yet to tackle a raft of administrative problems such as tax, pensions and the status of donors to universities, all of which are disincentives for researchers to move from one centre of excellence to another. The issue was also fundamental to efforts to define elements of a European PhD.
More than 1,000 participants from the newly expanded EU's 25 members were at the conference to hear Mr Busquin ask: "Are European universities under-funded, under-equipped or just unprepared to meet Europe's needs in becoming the world's most competitive knowledge-based society?"
Mr Busquin said that although the commission favoured a European Research Council to distribute funds to a scientific elite performing top-level research, it also wanted teaching-led universities to be better-funded across the EU, including those in new states.
The commission research is also sceptical about universities becoming directly involved in innovation. It points out that most US universities do not break even on their patent portfolios. It says that European universities, rather than becoming directly involved in commercial innovation, should stress their role as producers of intellectual property and of the people who can exploit it.
Research conducted for the conference showed that the US and the EU each carry out university research worth about $33 billion a year. But the US is much more successful in converting this spending into innovation. The commission believes that the US system, in which researchers compete for money across the whole country, produces a small number of very successful institutions that are also attractive to business as research partners.
The commission wants to replicate this success while ensuring that Europe has a large number of excellent teaching universities.