Two of Adelaide's rival universities could strike a surprising merger deal which they say could rank it among the "world's top 100" institutions.

The University of Adelaide and the University of South Australia [UniSA] have announced they will "explore the merits of a potential merger" to create a new combined university.

Leaders from both universities have agreed to explore the idea, and assess whether it would generate a stronger institution and provide better education outcomes for students.

Four universities in Australia made the most recent list of top 100 universities — the University of Melbourne, the University of Sydney, the University of Queensland and the Australian National University of Canberra.

Institutions in the top ten of the list include Oxford, Stanford and Harvard.

"The national and international landscapes of higher education are rapidly changing," a joint statement said.

"Now is the time to facilitate a conversation about whether uniting our universities would create a new internationally-renowned university of scale that would be well placed to anticipate and respond to this changing landscape."

University of South Australia students wait for their graduation ceremony to begin. ( ABC News: Isabel Dayman )

Potential to create one of the world's best universities

University councils from both institutions have endorsed a six-month period of collaboration to discuss the merger, explained in a joint statement from Chancellors Rear Admiral Kevin Scarce of the University of Adelaide and Mr Jim McDowell of UniSA.

A joint report of their findings will be delivered by the end of the year.

"We need to determine whether this would enable us to deliver greater access and benefits to students, create more opportunities for staff, enable greater collaboration with and contribution to our community, and make greater economic, social and cultural contributions to South Australia," the statement said.

"The question of mergers between universities has bounced around South Australia, as it has in other states, for two decades.

"We can foresee, for example, that combining and consolidating our complementary expertise, particularly in areas like defence, health, agriculture, education and engineering, would position a new university in the top few in Australia for size and scale; may place it firmly within the world's top 100; and have a reach that could make it one of the most international universities in Australia.

"We also need to explore whether this new university will create a wider range of pathways to enable greater access to education for more South Australians."

South Australia's other major tertiary institution, Flinders University, said it welcomed competition which could drive innovation quality teaching to the benefit of students.

"While Flinders University is always open to new pathways for higher education and students in South Australia, we are strong and growing in our own right," a Flinders University spokeswoman said.

"Flinders University continues to grow, with strong foundations and prospects for further growth, not only in Adelaide but the other regions in which the University operates, including the Northern Territory and regional South Australia and Victoria."

Adelaide and UniSA will undertake consultations with staff, students and alumni over the next six months, as well as business, industry, government and the people from the community.

During the process, all current academic programs, services and research relationships will continue as normal.

Government supportive of proactive approach

Premier Steven Marshall credited the universities in addressing the long-standing issue head on.

"No matter what the outcome of this process, their intention to work together shows that both institutions have the best interests of South Australia and its prosperity at heart," he said.

Minister for Education and Training, Senator Simon Birmingham also welcomed the potential merger, highlighting the importance of higher education.

Senator Birmingham was pleased that the universities were discussing a potential merger. ( ABC News: Jed Cooper )

"It's pleasing to see the universities of Adelaide and South Australia acknowledging that bold leaps may be required to deliver higher education that best serves South Australia's future requirements," he said.

"Thorough analysis to establish the benefits of any change are quite properly a precondition of final decisions and I look forward to closely assessing the outcomes of this work."

The University of Adelaide was founded in 1874 and caters to 27,000 students — it has three campuses in total, in the Adelaide CBD, in Waite and in Roseworthy.

The University of South Australia was founded in 1991 and caters to 37,000 students — it has six locations around South Australia, four within Adelaide and one in Whyalla and Mount Gambier.

Details of the consultation process will be announced by the universities in the coming weeks, with submissions to be called for from August to September.