In the 2005 Shanghai Jiao Tong rankings of the top 500, Oxford has gone down from eighth place to 10th. As in past years, the table is dominated by the United States, with Harvard again winning top ranking.
In 2003, the first year the table was introduced, Cambridge was sixth and Oxford was 10th. This year Cambridge has leapfrogged America's Stanford University. In all, there are 53 US institutions in the top 100, and the United Kingdom has only 11, the same number as last year. America has an advantage, with far more money in endowments flowing into the coffers every year. Harvard's endowment fund stood at $23bn last year (£12.7bn).
Universities are ranked by a range of criteria, including academic and research performance plus the number of alumni and staff winning Nobel Prizes and Fields Medals.
Cambridge is way ahead of the rest of field (apart from Harvard) on the ranking based on the performance of its alumni, scoring 99.8 marks out of a total of 100. Harvard scored the maximum marks in all areas of performance.
Imperial College London is also among the top 25 institutions and University College London is just outside at 26. In the list of European universities, there are 11 in the top 35 that did well enough to qualify for individual ranking.
The first four places were taken by UK institutions with Cambridge first, Oxford second, Imperial College third and University College London fourth.
Other British institutions in the list were Edinburgh, which was 47th worldwide, Manchester (53), Bristol (64), Sheffield (65), King's College London (80), Nottingham (83) and Birmingham (98).
The findings were published on a day when it was confirmed that applicants for university this autumn will face far stiffer competition for places, as a result of an 8.2 per cent surge in applications, taking the overall figure to more than 480,000, and an expected increase in A-grade passes when A-level results are known on Thursday.
Cambridge and Oxford universities reckon they have turned away about 10,000 candidates expected to get three grade-A passes this summer.
And a study shows that more than half the teachers in comprehensive schools still believe their pupils are discouraged from opting for Oxbridge because they would feel uncomfortable in its social setting. But perceptions have changed for the better since a similar study in 1998.
The study for the two universities, by the National Foundation for Educational Research, found that the level of education attained by a student's parents no longer had an impact on them as to whether to apply for a place.
Forty-four per cent of students said they were considering the two universities because of their prestige. Only 10 per cent said they would not apply because they thought they were "elitist institutions". The main reason for not applying was because they did not think they would get the necessary grades at A-level.
Geoff Parks, the director of admissions for the Cambridge colleges, said: "Admission to Oxford and Cambridge is based solely on academic ability and potential. "Both universities want to ensure the brightest UK students are applying for, and getting, our places."
A high ranking in the unofficial world league table is considered a massive boost for a university. In particular, it draws the attention of potential overseas recruits to its success, so increasing its share of the world student market.
* Attempts by Oxford and Cambridge to shed their "toff" image appear to be paying off. A study by the National Foundation for Educational Research found that teenagers were more likely to associate Oxbridge with top academic standards than social class, compared with six years ago.
The top 30 universities worldwide
Listed in order of the 2005 Shanghai Jiao Tong University rankings (last year's rankings in brackets)
1 (1) Harvard, US, 100
2 (3) Cambridge, UK, 73.6
3 (2) Stanford, California, US, 73.4
4 (4) Berkeley, California, US, 72.8
5 (5) Massachusetts Inst Tech, US, 70.1
6 (6) California Inst Tech, US, 67.1
7 (9) Columbia, US, 62.3
8 (7) Princeton, US, 60.9
9 (10) Chicago, US, 60.1
10 (8) Oxford, UK, 59.7
11 (11) Yale, US, 56.9
12 (12) Cornell, US, 54.6
13 (13) San Diego, US, 51.0
14 (16) Los Angeles, US, 50.6
15 (15) Pennsylvania, US, 50.2
16 (18) Madison, Wisconsin, US, 49.2
17 (20) Seattle, US, 48.4
18 (17) San Francisco, US, 47.8
19 (22) Johns Hopkins, Baltimore, US, 46.9
20 (14) Tokyo, Japan, 46.7
21 (19) Ann Arbor, Michigan, US, 44.9
22 (21) Kyoto, Japan, 43.8
23 (23) Imperial College London, UK, 43.7
24 (24) Toronto, Canada, 43.1
25 (25=) Urbana Champaign, Illinois, US, 42.8
26 (25=) University College London, UK, 42.6
27 (27) Swiss Fed Inst Tech, Zurich, Switzerland, 41.7
28 (28) St Louis, US, 40.7
29 (32) New York, US, 38.8
30 (29) Rockefeller, US, 38.2
Britain's top 10 universities
The leading UK institutions (current world ranking in brackets)
1. Cambridge (2)
2. Oxford (10)
3. Imperial College, London (23)
4. University College, London (26)
5. Edinburgh (47)
6. Manchester (53)
7. Bristol (64)
8. Sheffield (65)
9. King's College London (80)
10. Nottingham (83)