Ms Hyslop says universities will receive a reasonable allocation

Fiona Hyslop also rejected Tory calls for an independent inquiry into higher education funding.

University leaders said they had requested a �168m increase in 2007-2008 but received �30m and voiced concern about further investment.

They said Scottish universities could lose out to competitors elsewhere.

The Scottish Government has pledged overall funding of �5.24bn to higher and further education over three years.

Sir Muir Russell, the convener of Universities Scotland, said: "The spending review announcement is a disappointing response to the strong case for investment in higher education made by universities.

We have to live within our means when we get that kind of settlement from Westminster Education secretary Fiona Hyslop

"We are concerned that it may weaken our competitive position relative to universities in England."

Ms Hyslop said she would talk to principals but insisted that spending had increased under the SNP.

Ms Hyslop said: "It's a tight settlement and you have to say, should hospital patients suffer in order to give universities a �0.5bn increase when actually we can manage a reasonable settlement that keeps us competitive.

"That is the important thing.

Funding package

"We have to live within our means when we get that kind of settlement from Westminster."

The education secretary said there were "challenges ahead" and added that she wanted to discuss the issue with university principals.

She said that the proportion of funds given to universities had gone up and added: "Despite that tight settlement we're prepared to give a bigger share of government spend to universities than they had under the last government."

Ms Hyslop rejected a call for an urgent and independent review of higher education which had been made by Murdo Fraser, education spokesman for the Scottish Conservatives.

Mr Fraser said: "It is clear that Fiona Hyslop has meekly surrendered in the battle for budget resources.

"During the elections in May, Scottish Conservatives called for a full and independent review into university and student funding.