Hefce's analysis of the 11th annual Higher Education - Business and Community Interaction Survey, released on 26 July, found that income from contract research increased from ?983 million to ?1.05 billion.
Universities also made ?606 million from providing continuing professional development and similar courses. Consultancy earned the academy ?370 million, ?8 million more than the previous year.
Just over ?1.2 billion of the total came from public and third-sector organisations, a figure that has been rising steadily since 2003-04, the report shows.
Income from large businesses rose by 7 per cent to ?629 million, although this was still below pre-recession levels.
Universities produced 268 formal spin-off companies, 5 fewer than in 2009-10. The report also notes a decline in the number of patents granted, from 8 to 757.
The report argues that the overall increase in knowledge-exchange income is "particularly impressive" given the "context of wider economic turbulence".
Although the analysis concludes that US universities are better at producing commercial licences than their UK peers, it also finds that UK institutions create more spin-off companies per pound of public money spent on research.
In January, David Willetts, the universities and science minister, said the academy should aim to increase its income from knowledge exchange by 10 per cent by 2014-15.
Sir Alan Langlands, chief executive of Hefce, said that the sector was "clearly delivering" on this ambition. "In challenging economic times, [it] is doing all it can to drive growth - in everything from the commercialisation of new knowledge, delivery of professional training and research with business, through to income from their equipment and services."