Huddersfield University could be dissolved within two years to make way for a new university serving West and South Yorkshire.
Huddersfield announced on Wednesday that it was entering detailed merger talks with Doncaster College. A decision is due next March.
Projections indicate there would be some 20,000 students. Doncaster students would be housed in a new £160 million campus to be built in 2004.
John Tarrant, Huddersfield vice-chancellor, said the widening participation agenda was driving the merger plans, which could create a new institution with a £100 million turnover.
"Huddersfield has already virtually saturated the local market for higher education. I would be disappointed if we hadn't increased numbers of higher education students in Doncaster from the current 1,200 to 5,000 by 2010."
Doncaster has one of the lowest higher education participation rates at 41 per cent below the national average.