They insisted Thames Valley University in west London had a sound future, despite last year's damning report on academic standards, and rejected proposals to split it up into a series of local colleges.
Funding officials backed the 84 proposals in the three-year plan, but said staff would need "an absolute determination to secure high quality and standards" to see them through.
Under the scheme, drawn up by the first hit squad to be drafted into a university, pounds 7.2m will be poured into Thames Valley, which recorded a 20 per cent drop in applications this year.
Staff cuts will be inevitable.
It was feared the former Polytechnic of West London, based in Ealing and Slough, might be broken up in the wake of the highly critical report by higher education standards watchdogs which expressed serious doubts about its ability to award degrees.It led to the resignation of the vice chancellor, Mike Fitzgerald.
Concerns about the university surfaced when it invited the higher education Quality Assurance Agency to investigate allegations of "academic dumbing down". The QAA's report found "some evidence that the university may have lost sight of some basic principles of quality assurance which should be commonplace at an institution with independent degree-awarding powers".
The action plan, drawn up by the acting vice-chancellor Sir William Taylor, recommends a wholesale reorganisation of the university, new internal review panels and a re-organisation of teaching methods.
Sheila Forbes, chairman of the university's governors, said: "The university can be assured of a secure academic and financial future."
Andrew Pakes, president of the National Union of Students, said the decision was "fantastic news".
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