A complete rethink of the government's proposed e-university risks repeating the problems of the University for Industry.

Plans for an elite core of institutions to lead the project - unveiled as part of education secretary David Blunkett's speech at the University of Greenwich in February - have been abandoned.

The e-university will instead take a more inclusive approach, acting as a channel for commissioning and distributing higher education, similar to the UfI, which plans to deliver further education courses under the Learndirect banner.

Neil Gregory, head of the research and project development division at the London School of Economics, suggested that the LSE would be wary of involvement in a more inclusive e-university. "An inclusive model flies in the face of what, in our view, is necessary for success. There are few institutions with which the LSE would want to be involved."

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The LSE has already collaborated with other prestigious institutions to form online learning providers Unext and Fathom.

Sir John Daniel, vice-chancellor of the Open University, commented: "We have some 100,000 students online, plus 100,000 teachers doing schools training. I am glad that we have been able to do this without having to get partnerships together. We are going to be the leading e-university whether people like it or not."

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But Sir John said that if the OU was asked to play a major role in the government project, he would consider it.

The about-turn on the business model for the e-university comes after a series of stand-up rows between members of the e-university steering group. This summer, the steering group rejected a business model designed by consultant PricewaterhouseCoopers and requested a revised proposal.

Under the new plans -expected to be published next week - the e-university will be a gateway to existing online qualifications offered by various institutions. It will also commission material where it identifies a gap between demand and supply.

Initially it will concentrate on offering masters degrees and professional qualifications. One possibility is for the Higher Education Funding Council for England to host the e-university on its website.

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Tim O'Shea, master of Birkbeck College, provost of Gresham College, London, and a member of the e-university steering group, said: "It is a very inclusive business model. It lets us take advantage of what is best in the sector - with a curriculum that is credible, and a group of academics overseeing it. I wouldn't have said that three months ago."

Patricia Ambrose, chief executive of the Standing Conference of Principals, said: "We would welcome the development of a more inclusive model that recognises the provision of high-quality education across the sector."

Roy Leitch, assistant principal for learning strategy at Heriot-Watt University, welcomed the change. "It is open and inclusive to those universities committed to this way forward. It allows universities to view this as a fundamental review of distance learning and campus-based activity rather than a commercial opportunity."

But Professor Leitch warned that the development of a common framework and standard would be fraught with difficulties. "It is a similar approach to that of the Quality Assurance Agency: get a common framework and standards, but at the same time, allow autonomy of institutions."

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Problems also remain with the image of the e-university. If it is to attract overseas students, it must have a strong brand image. But elite institutions are unlikely to lend their names to an inclusive e-university.

The proposed model will remain open for consultation and is expected to be finalised by the end of the year for discussion by the Hefce board at its January meeting.

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