The Turnbull government will slash university funding by hundreds of millions of dollars in the May budget while hiking student fees and requiring graduates to pay back their loans faster.

The government will justify the cuts by pointing to a major new report which found universities receive adequate funding for most courses they teach and that their revenues are growing faster than costs.

Despite pleas from universities that they cannot absorb any more cuts, Fairfax Media understands they will be hit with a new efficiency dividend of between 2 and 3 per cent to be phased in over several years.

Education Minister Simon Birmingham, who will address university and business leaders on Monday night, is expected to release the government's higher education reform package in coming days.