According to unconfirmed reports, the University of Cambridge may consider going private, following plans to reform funding for higher education outlined in a report by Lord Browne last week.

Speaking to The Sunday Times, Barry Sheerman, Labour MP and former chairman of the Commons education select committee said, "I was told by Cambridge that they may privatise themselves because they are so aggrieved by the cuts and Lord Browne’s proposals."

It is feared that rises in tuition fees may not be enough to compensate for a loss in Government funding and that English universities may no longer be able to compete with institutions worldwide.

It is claimed that up to 80 per cent of direct financial support for degree courses will be cut in the Comprehensive Spending Review, which is due to be published this Wednesday, plus an additional £1 billion of research funding.

But privatisation would result in a loss of all direct funding for degrees and students could lose access to loans and Government grants. Universities would be able to charge unlimited fees, culminating in even higher debt rates for students, as well as escape Government pressure for the admission of more students from poorer backgrounds.

In his report last week, Lord Browne, the former head of BP, suggested the current cap on fees of £3,290 a year be removed to help universities compensate for their loss of funding from taxpayers’ money, but recommended any university charging more than £6,000 should pay a rising percentage of each additional £1,000 to the Government.

After Lord Browne’s report, Oxford and Cambridge both called for a rise in tuition fees. Some top universities fear that Lord Browne’s review will affect their standards and may undermine their global standing.

An unnamed Cambridge source was quoted in The Sunday Times saying: "We have a deficit of £96 million a year. We are not competing with Leeds, we are competing with Harvard, Yale, Princeton and Stanford."

However, the official statement from Cambridge said: "The University has no position on these matters. It will only agree a position once it has seen the Government’s formal response to the Browne Review and the detail of the Comprehensive Spending Review."

It is believed that Business Secretary Vince Cable is planning even tighter controls and in the Government’s formal response to the review he may impose a £7,000 cap.