Image caption There will be more competition for students in the changing system

Two English universities are actively considering becoming private institutions, research suggests.

This would mean they would no longer get direct funding for research or teaching from the government.

The government has said it wants to open up the system to private providers of higher education.

The two universities, which have not been named, took part in a survey of vice chancellors by management consultants PA Consulting Group.

The authors of the survey say the institutions are not part of the Russell Group, which represents some of the UK's leading universities.

They contacted the vice chancellors of 165 universities and received responses from 65.

The authors say a "substantial minority" of institutions (just over 20 of those which responded) want to minimise their dependence on government-controlled activities.

'Top of the agenda'

Co-author Mike Boxall said there were probably more than two institutions which were actively looking at whether to go private.

"It's probably on the top of the agenda for a number of universities," he said.

"It's in the public domain that the LSE has actively considered it. There are probably more than [the two universities] for whom it will be an active thing.

"It's more about universities looking at widening their base and thinking about where to build their business.

"The publicly-regulated area is not offering a lot of growth for universities."

The Universities Minister David Willetts has talked of wanting to "open up the system" and the higher education White Paper, published earlier this week, sets out ways the government aims to do that.

Private institutions are being encouraged to compete with publicly-funded institutions to offer places.

In total, a quarter of all undergraduate university places will be up for grabs - unlike the present system where individual institutions are given funding for a set allocation of places.

New legislation will allow students to borrow the maximum annual undergraduate tuition fee of £9,000 as long as the institution (publicly-funded or private) agrees to abide by regulations on fair access, quality and student complaints.

Fears of going bust

Changes to university funding mean teaching grants are being largely cut. Funding is expected to come more directly from students and their increased tuition fees.

Critics say this will mean departments - and even universities - closing, and ministers have said that they accept some institutions might fail.

Two universities which took part in the survey said they feared they might not exist in ten years' time.

The researchers at the PA Consulting Group said some universities were "still distinctly nervous", with 11 out of the 65 which took part in the survey saying they were concerned about shortages of investment funds and staff.

And about 20 of the universities said they expected the increase in tuition fees to lead to a "significant reduction in student demand".

Overall, Mr Boxall said that after a period of anger and upheaval over the changes in higher education, many universities were now "feeling quite bullish".

"After a lot of change in the cost structure, a number are feeling that they have come out the other side. A lot of institutions have a lot of cash and a big chunk of the sector is in good shape."

He said institutions were looking at various growth strategies, particularly further expansion into the international market.