Universities that have rushed to form partnerships or franchise agreements with other institutions are in danger of awarding "second best" degrees, says the Higher Education Quality Council.

Roger Brown, chief executive of HEQC, is calling for a meeting with the further and higher education funding councils to address the issue. "We should use this period of consolidation of student numbers to establish proper quality assurance procedures to ensure that such arrangements are made on a sound footing."

He said that the growth of collaborative arrangements with FE colleges and other institutions, including private institutions like independent law schools, which fall outside the remit of the quality assessment exercise of the funding council, represented a "timebomb for the Government".

A new report,Learning from Collaborative Audit, is based on 14 audits carried out by the quality council, covering first degrees and some taught higher degrees. It found evidence that the monitoring of these arrangements is weaker than the monitoring of degree courses within the universities. It also found early indications that arrangements with institutions overseas were not being properly regulated. The council will produce a further report on this in the near future.

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A subsequent report on collaborative provision at Wolverhampton University alarmed the council still further. In an unusually critical document, auditors say the university is failing at a "strategic level" to co-ordinate its various collaborative arrangements. It has no "formal, updated and actively promulgated academic board policy" on collaboration.

Auditors found evidence of confusion over terms used, particulary the meaning of an "associate college", and that students on some franchised courses had been misled into believing that they would be able to progress on to an internal university course.

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Wolverhampton has 4,000 students on 67 franchised courses, including nine postgraduate and eight overseas. The university argues that it has already addressed many of the issues raised in the report .

Mick Harrison, Wolverhampton's vice chancellor, said: "The university has taken the HEQC audit team's concerns about our collaborative provision very seriously indeed, not least because they align closely with issues raised through internal and external audits of our own quality management systems."