Publicly funded PhDs should become the preserve of the research elite, with doctoral students supported by the state only if they work in departments of a certain standard.
The 1994 Group of small research-intensive universities has called for measures that would result in a far greater concentration of doctoral students within the sector.
The proposals have led to accusations that the top research universities are pursuing "protectionist" policies that will erode the reputation of UK higher education.
The case for more focused funding is made in a draft report to the review of postgraduate study in the UK, which is being led by Adrian Smith, director-general of research at the Department for Business, Innovation and Skills.
"A new quality threshold on PhD provision must be introduced," the 1994 Group says in the report. "This would allow all institutions to provide PhDs if they wish, but provision below the quality threshold would be reliant on fee income rather than government funds."
The analysis of postgraduate provision at UK universities says that the research-intensive universities of the Russell and 1994 groups have "the greatest productivity of PhDs, in terms of their completion rates and the relationship between completions and number of academic staff".
In a list of the top 40 institutions ranked by average doctoral completions per 100 academic staff between 2001 and 2007, all but two are research-intensives, it says. Only the universities of Aberystwyth and Bradford, both University Alliance members, have more than ten PhD completions per 100 staff.
Professor Smith's review of postgraduate provision is looking at several "key themes" emerging from the consultation to date. These include questions of fees and funding and whether there is an optimal number of taught and research postgraduates in the UK.
Les Ebdon, vice-chancellor of the University of Bedfordshire and chair of Million+, which represents new universities, condemned the 1994 Group report as "just another attempt to dress up an argument to concentrate resources regardless of quality".
"It pays no regard to mode of study, the much higher number of mature and part-time doctoral students at modern universities, fails to distinguish between UK and international students and provides absolutely no analysis in terms of productivity compared to quality-related investment," he said.
Such "protectionism and restrictive practices can only undermine the international reputation and competitiveness of UK higher education", he concluded.
Libby Aston, director of the University Alliance, was also critical.
"Alliance universities awarded nearly 1,200 PhDs in 2007-08 in comparison with just over 3,000 from 1994 Group universities - with many delivered on a more flexible basis and in areas that are critical to the UK economy," she said.
"On average, Alliance universities award twice as many PhDs per funding council research allocation as either the 1994 Group or the Russell Group universities."
She added that it was "essential to look at the relationship between PhD quality, output, employability and completion rates" but said more work was needed to understand this.
"Completion volume in relation to research and teaching staff is a measure of research intensity rather than quality or efficiency; it tells us nothing about economic impact or value for money," she said.