BUDAPEST — In 1989, as the Soviet Union crumbled and countries across Eastern and Central Europe emerged from decades of political oppression, a group of intellectuals led by the Hungarian-born philanthropist George Soros proposed a university that would help in the transition to democracy from dictatorship.

Two years later, Central European University was founded in Prague, dedicated to educating a new generation on the foundations of a free society, including a respect for the rule of law and universal human rights. In 1993, it moved to Budapest.

Now, as Hungary drifts toward authoritarian rule under Prime Minister Viktor Orban, the university says it is being forced to close its Budapest campus, portraying itself as a victim of Mr. Orban’s efforts to vilify Mr. Soros and to stifle dissent and academic freedom.

On Thursday, university officials said they would stop admitting new students in Budapest after failing to resolve a dispute with the government over a new law that appeared to require it to open a branch in the United States. Central European University is accredited in Hungary and the United States.