The Committee of Vice-Chancellors and Principals is alarmed by plans to base future funding on quality assessments carried out by the funding councils themselves.
University teaching should be inspected by an independent body that is seen to be free from political bias, according to the committee, which now represents the heads of the former polytechnics as well as the old universities.
This week the Higher Education Funding Council for England will inform universities how it intends to carry out its rolling programme to assess teaching quality, starting with departments of chemistry, history, law and mechanical engineering.
Tim Boswell, the Minister for Higher Education, insists that the council should use these rankings to reward universities with good departments and withdraw money from unsatisfactory ones.
He also intends them to be published alongside ratings for research and other performance indicators, thus making the introduction of university league tables inevitable. A committee spokesman said: 'On the pretext of disapproving of the standard of teaching you could close down a department of which you disapproved politically. You can dress up all manner of political interference.'
Peter Knight, vice-chancellor of the University of Central England in Birmingham, said it was a 'fundamental threat to academic freedom'. He added: 'The one place judgements about quality should never be is in the hands of the funders. It gives them control of body and soul.'
The funding council says it is carrying out its legal duties under the 1992 Further and Higher Education Act, but universities dispute the council's and the minister's interpretation of the Act.
The new Further Education Funding Council, which takes over responsibility for nearly 500 colleges in April, is also charged with assessing quality and publishing its findings but has been careful to separate the funding and inspection functions. An independent inspectorate is being set up on the lines of the former HM Inspectorate, although the council will withdraw funding as a last resort from a college that is unable to correct poor quality after a reasonable period.
Mr Boswell has warned universities against academic delaying tactics. By rewarding departments with excellent teaching and showing a 'yellow card' to those judged to be poor, the council would give all universities a direct incentive to ensure that they pay close attention to the needs of their students. 'Let there be no doubt that we are determined to get this show on the road . . . Higher education institutions are autonomous but they are also accountable,' he told a conference on quality in higher education.
Vice-chancellors fear league tables could be unfair to some institutions and misleading to students applying for courses, but they accept that as publicly-funded institutions, universities must publish information and show that they are giving value for money.