St Andrews University could merge with Dundee University in an attempt to create a Scottish rival to Oxford and Cambridge.
The new merged university would probably be led by Sir Alan Langlands, chief executive of the NHS, who announced recently that he will be leaving his post in September to become principal at Dundee.
It is understood that talks had been stalled until Sir Alan confirmed his move last month and that discussions are now going ahead. The aim would be to combine the arts expertise at St Andrews with the scientific excellence of Dundee, which last year was the third most generously funded university research facility in Scotland.
The two universities, which are about 15 miles apart, have a long history of co-operation: Dundee University was formerly known as Queen's College and was a part of St Andrews until 1967.
A signal for the alliance was made in Dundee University's annual report published this week, which states: "We have agreed a 'preferred partnership' with the University of St Andrews which offers great rewards to both parties."
An agreement to pool the resources of the two universities also fits a strand for conglomeration of universities within Britain as competition between academic institutions intensifies. It also reflects financial fears following some fall-off in applications to Scottish universities after the introduction of tuition fees.
Glasgow and Strathclyde universities have recently become allied to each other although they have avoided a full merger. Dundee and St Andrews may eventually agree to such an arms-length arrangement rather than a full merger.
One problem in securing a merger may come from some of the academic staff at St Andrews. The university is one of Britain's oldest, founded in 1412, about two centuries after Oxford. It is well-respected both north and south of the border and generally regarded as Scotland's best university outside the central belt, which takes in Glasgow and Edinburgh.
Some staff are likely to be wary of the university's identity being diluted through merger with another institution. Any changes, however, are unlikely to take place earlier than 2005.