Rules governing the use of the prestigious "university" title could be relaxed, which could make it easier for foreign-based and private institutions to set up in the UK, according to proposals in the government's higher education White Paper.
The government wants to look at easing restrictions that stop some providers from seeking the title simply because they have a small student body. It will also consider changes to the rules for gaining degree-awarding powers.
Currently, for the right to use the title "university", an institution must have taught degree-awarding powers, have at least 4,000 full-time students - of which 3,000 are registered on degree-level courses - and be able to show "good governance".
David Willetts, the universities and science minister, said the government would consider relaxing the rule on the numbers of students. "There are obviously some colleges providing higher education that have high prestige and value, and we're going to look again at the rules that stop them taking the name 'university'," he said.
The White Paper also makes it clear that the government will consider ending what Mr Willetts called the "inflexibility" that stops organisations that do not teach students from applying for degree-awarding powers. He referred to the struggle that Pearson - the parent company of the exam provider Edexcel - had experienced in applying for the right to award a BTEC degree.
Mr Willetts added that it should be made easier for teaching universities to use other organisations' degrees. One "very likely way" in which some of the 20,000 "contestable" places will be delivered in the 2012-13 academic year could be through further education colleges or other new alternative providers offering Open University degrees.
"We shouldn't have a quality regime and a regulatory regime that just assume that degree-awarding powers and teaching go together," Mr Willetts said. He stressed that existing institutions were "not going to be dismembered" and stopped from providing their own degrees - the aim was to see that the two functions of examining and teaching were "separated much more clearly".
The White Paper also clarifies the Higher Education Funding Council for England's role in dealing with financially failing institutions. "The focus for Hefce and (the Department for Business, Innovation and Skills) in the event of an institution becoming unviable would be to facilitate an orderly wind-down and to protect the interests of students, to ensure they can, at a minimum, complete their studies," it says.
It also suggests that not-for profit institutions that do not currently receive teaching grant from Hefce could do so in the future.