A funding shift that would reduce the availability of small grants for individuals in favour of concentrating cash on larger projects risks shackling scientific creativity, researchers have warned.
The prospect of research councils focusing larger sums on a smaller number of projects has been raised by the huge savings being demanded of them.
David Willetts, the universities and science minister, has said he wants "ruthless" efficiency savings in excess of 30 per cent from the councils.
During a hearing of the House of Lords Science and Technology Committee last week, David Delpy, chief executive of the Engineering and Physical Sciences Research Council, discussed the possibility of fewer but more generous grants.
He said his organisation was contemplating moving away from project-based funding towards larger grants focused on individual group leaders.
"It is likely that the number of individuals we fund may reduce, but they will be funded in a larger and hopefully more continuous way, (while) managing larger groups of researchers," he said.
"We will probably finish up with fewer individual (principal investigators) but with roughly the same number of researchers being funded overall."
A spokeswoman for the EPSRC said the council had formulated the approach prior to the Comprehensive Spending Review.
She said it had been motivated by a desire to allow researchers more flexibility and to maximise the impact of research.
A similar approach has recently been adopted by the Wellcome Trust with its Investigator Awards.
But researchers have pointed out that the efficiency of research groups tends to drop when they grow beyond a certain size.
Peter Lawrence, emeritus researcher in the University of Cambridge's department of zoology, said he was "totally against" the trend for fewer, larger grants because of the problems it would pose for identifying the best researchers.
"True innovation will be less likely, as who knows where it would come from?" he said.
A spokeswoman for the Science and Technology Facilities Council also cited stability and flexibility as the main rationales for merging its grants programmes into one "consolidated grant", a move announced earlier this month.
But the STFC also expects the number of applications it receives to fall by 82 per cent, delivering a saving of 35 per cent on the internal cost of peer review.
Donald Braben, honorary professor in the department of Earth sciences at University College London, interpreted Professor Delpy's comments to the Lords committee as a signal that the EPSRC would focus more funding on priority areas. He described such a move as "deplorable".
He said that success had not come to the scientists of the past by "following the madding crowds". However, "the EPSRC's myopic decision will mean that their successors will have little alternative".
Researchers also worry that the focus on funding strategically important areas risks denuding the UK of expertise that may become critical in the future.
The funding shift may also cause problems in terms of morale, as some co-investigators on large projects feel undervalued by their institutions compared with designated principal investigators.
Meanwhile, Professor Delpy said that the research councils had responded to the expected slashing of their capital budgets by drawing up a common priority list for the funding of major facilities.
He said the EPSRC would insist equipment it funded be used "24/7" and be located at institutions with high-quality technical support, "rather than being run by the PhD student the principal investigator happens to have on their grant".
The announcement of the science budget's detailed allocations is expected in the middle of December.
Adrian Smith, director general for knowledge and innovation at the Department for Business, Innovation and Skills, told the House of Lords Science and Technology Committee that he and David Willetts, the universities and science minister, would aim to avoid making irreversible decisions such as closing large facilities.
They would also consider factors such as the need to maintain the flow of young researchers, he said.
Professor Smith has sought further advice from the six bodies he consulted before the Comprehensive Spending Review. The Royal Academy of Engineering reiterated its call for a focus on research likely to lead to short- or medium-term economic benefits.
The British Academy emphasised the economically and socially useful research produced cheaply by the humanities and social sciences.
All agreed that the budgetary split between the funding and research councils was appropriate.