University heads are considering how to tackle what they claim is a billion pound funding shortfall.

Universities UK - formerly the Committee of Vice Chancellors and Principals - have set out a series of funding options, which they say could bridge the gap between what they receive and what they say they need.

If extra money does not come from government, then these options will include the raising of fees paid by students - with the prospect of means-tested fees of up to �3,000 per year.

Professor Newby says extra funding is needed if UK universities are to compete globally

Commissioned by the vice chancellors' organisation, the report will be the basis of further discussion, before a funding policy announcement in March - although it is not expected that there will be an endorsement of a single funding plan.

Speaking at the re-branding of the CVCP as Universities UK, its president, Professor Sir Howard Newby, said that despite extra support from the government, there would still be a �1bn annual shortfall.

Extra money is needed to "enhance quality", "widen access" and to allow universities to "compete globally", he said.

As such, he said that decisions would have to be taken to resolve the income gap - with vice chancellors keeping an open mind as to how extra money could be raised.

Graduate tax

The research document lays out a series of possible funding models, including "up-front" fees, such as tuition fees and top-up fees, and "graduate tax" systems, in which repayments begin when graduates cross an earnings threshold.

Attitudes to how students were funded through university were changing, said Professor Newby, and he drew an analogy with the way that tax relief on mortgages had gradually been phased out.

As the election approaches, the prospect of a sharp rise in student fees could become politically sensitive, particularly as it might hit middle-income families the hardest.

Top-up fees

The government has so far opposed any proposal for top-up fees - in which universities could set their own level of fees.

And universities themselves are divided over how to raise extra funds, with some explicitly rejecting the option of top-up fees, while others have shown sympathy for the idea.

Union leader Paul Mackney says that the report is "powerful ammunition" for staff in higher education seeking pay increases.

"Research like this demonstrates the urgent need for a longer-term funding strategy for higher education," said Mr Mackney, general secretary of NATFHE.