Malaysian ministers have hailed Nottingham University's plan to build the first branch campus of a British university here as a "landmark" in their drive to broaden higher education opportunities.

But official approval of the plan brought calls from Malaysia's 500 private colleges for a cap on issuing foreign campus licences.

Teo Chiang Liang, chief executive of Kolej Bandar Utama College and president of Malaysia's private colleges association, said colleges were concerned about their role. They are involved in numerous franchising arrangements with foreign institutions, including 11 three-year British university degree programmes delivered entirely in Malaysia. Many have been pressing the government to allow them to apply for private university status.

"We are saying we do not object to foreign campuses, but we think there should be a cap on the number. Otherwise, what is our role? Are we just delivering franchised courses and that is it?" he said.

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There are growing concerns about the British and Australian recruitment war as cash-strapped Malaysians shop around for affordable quality higher education, he claimed.

Education minister Dato' Najib bin Tun Abdul Razak agreed on an eventual cap but said there was still room for more, including at least two from Britain. "We cannot have unbridled growth - that would lead to negative competition. But at the same time, we hope this development will help us achieve our objective of making Malaysia a centre of education excellence in the region."

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Nottingham said it would build the campus on a 100-acre green-field site south of Kuala Lumpur. It will eventually accommodate about 2,500 undergraduate and postgraduate students on computer engineering and science, electronic engineering, information technology, business and management courses.

Chris O'Brien, pro-vice-chancellor at Nottingham, insisted the new campus, which will be built with the backing of two blue-chip Malaysian companies, was to meet Malaysia's need for a more flexible system, rather than to compete with other institutions.

But Ted Edmondson, director of the British Council in Malaysia, warned that rivalry among British universities to stake a claim in Malaysia had led some to criticise others at recruitment fairs. This played into the hands of Australia, which was preparing to "knock the Brits off the number one spot".

Australia's Monash University was first to gain a licence for a Malaysian campus last year, followed by Curtin.

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