When mass-market newspapers in India run headlines such as "UK varsities go bankrupt", alarm bells sound for vice-chancellors.

That headline appeared on the website of India's City Journal newspaper last week, above a story on "British universities in crisis".

The article, by the Press Trust of India news agency, was subsequently picked up by other respected newspapers, including The Economic Times and The Hindu.

The coverage prompted a letter of complaint to the newspapers from Universities UK, and added to fears that the reputation of UK higher education overseas may be suffering following funding changes.

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The Press Trust of India article began with a sentence that will have caused great concern for some British vice-chancellors in the UK: "Indian students preparing to leave for Britain to enrol on courses from September may well check the status of their universities - major funding cuts have plunged many British universities in crisis with courses being abolished and lecturers rendered redundant."

With a population of more than 1.2 billion, a fast-growing middle class and widespread respect for British education, India is one of the most fertile overseas student recruitment grounds for UK universities.

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According to the Higher Education Statistics Agency, there were 38,500 Indian students in the UK in 2009-10 - more than from any other non-European Union country except China.

However, the Indian article says: "There have also been instances of Indian students being disappointed with the quality of education they get (in the UK).

"The London Metropolitan University, for example, has decided to close 70 per cent of its courses in areas such as history, philosophy, performing arts, Caribbean studies and modern languages."

The article accurately reports that "many universities have started the process of streamlining, cost cutting and staff reduction".

It cites coverage of pressure on cross-course subsidies for arts subjects, and a University and College Union report that says a third of England's universities are "at risk".

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The article drew a sharp response from Nicola Dandridge, UUK's chief executive, and Joanna Newman, the director of the UK HE International and Europe Unit.

In a letter to The Economic Times and The Hindu, they say the article "paints a peculiarly gloomy and misleading picture of the current situation in UK higher education".

"Where is the evidence to assert that 'cuts have plunged many British universities in crisis'?" they ask.

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Ms Dandridge and Ms Newman say that while the funding of UK universities is switching from the taxpayer to the graduate under the new tuition fees regime, "the amount of money universities receive should remain steady, if not increase over the coming years".

"In the rare event that a university finds itself at financial risk, it will work with the funding council to ensure it gets back quickly on to an even keel," they add.

The negative coverage will be particularly galling to UUK and the IEU, which earlier this month held a briefing for foreign journalists in London to correct "popular misconceptions".

These include suggestions that overseas student numbers are to be cut, that their fees are to rise, and that the post-study work pathway is to be closed, UUK says.

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john.morgan@tsleducation.com.