More than 70,000 foreign students are enrolled in offshore programmes run by Australian universities, but vice-chancellors are resisting federal government demands for tighter control of their overseas operations.
Brendan Nelson, the Education Minister, said projections of growth over the next decade indicated that offshore provision was likely to outstrip onshore operations. He predicted that by 2012, income from offshore activities for all education sectors would be worth more than A$1.5 billion (£640 million) a year.
He claimed that with 1,500 overseas programmes being operated by universities, it was only a matter of time before "something unacceptable happened".
In a paper released last month, Dr Nelson proposes transferring responsibility for accreditation and registration of institutions offering courses overseas to a new national authority. Alternatively, he suggests establishing an advisory board to oversee offshore programmes.
The Australian Vice-Chancellors' Committee rejected the proposals and called for maintenance of the existing system, whereby universities with overseas operations were independent. The vice-chancellors said that the self-accrediting nature and academic autonomy of universities should be retained.
Running courses offshore is not necessarily an easy way to generate income, as Monash University has found. The university has set up campuses in South Africa and Malaysia and study centres in London and Prato in Italy. In a report to the Victorian Parliament, the state Auditor-General says that last year Monash's South African operations had a deficit of about A$13 million.
The report describes offshore campuses as high-risk ventures. It warns that many did not generate adequate returns and that similar results could be achieved with less risky strategies that are more flexible.
Until September 2004, the University of Southern Queensland's Dubai campus was an "unauthorised" venture, which Bill Lovegrove, the vice-chancellor, discovered only after receiving a job application to work there.
After taking legal advice, the university suspended three senior staff involved in setting up the campus. Two of the men subsequently resigned.
USQ now has problems relating to bedding down programmes and staff - and sharp rent rises at the Dubai campus.
Central Queensland University is one of Australia's largest overseas student providers, after Monash and RMIT University. It derives 46 per cent of its total operating revenue from its 11,000 foreign students. It also runs joint campus ventures in Fiji, Singapore, Hong Kong and soon Shanghai.
But despite having the highest ratio of foreign students of any Australian university, it has in recent years had problems balancing its books. Total revenue in 2002 was more than A$200 million, yet CQU reported a deficit of nearly A$4 million - down from a profit of A$16 million the previous year.