Just over one-third of doctoral students funded by the academy submit a thesis within four years, a little over half within six years, and one-third never complete a thesis at all, according to the report.
Recently, in no subject did the thesis submission rate exceed 50 per cent within four years, and the submission rate after six years in the two main subjects, history and English, fell below 50 per cent.
The report, prepared by a joint working group of the British Academy and the Committee of Vice-chancellors and Principals, calls for tougher hurdles before students are given full funding.
At present doctoral students are funded for three years. The group proposes that the funding should be increased to four years but that a new 'one-plus-three' model be introduced. The majority of three-year awards should go only to students who had first undertaken an initial year of carefully assessed postgraduate study.
The group 'has reached the view that students' performance at first degree level is not an adequate test of their suitability and commitment to undertake doctoral research'.
The group recognises that 'the poor success rate raises difficult questions of accountability in the expenditure of large amounts of public money'. But it rejects imposing sanctions on institutions or departments with unacceptably low submission rates.
One problem is that many students embark on research projects which are inadequately defined and planned and with unrealistic expectations about what they will be able to achieve. But the group says 'even a voyage into the unknown must have a purpose, a direction and an appropriate means of travel'. Inadequate supervision is cited as the main reason for low submission rates.
Both Oxford and Cambridge universities, which account for more than one-third of all postgraduates supported by the academy, were against the proposals.