A deep split has emerged between Australia's vice chancellors and the nation's academics over the future of the federal government's Aus$80 million (Pounds 40 million) quality assurance scheme.

The Australian Vice Chancellors' Committee has called on the government to keep its promise and allow the programme to run for a third year.

But the National Tertiary Education Union wants the government to slash spending on the next quality round by Aus$60 million and use the money saved to create 2,500 new places for students by 1997.

Vice chancellors fear that the conflict between the two groups could encourage the government to abandon the scheme in its entirety as a way of reducing its higher education expenditure.

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Simon Crean, the education minister, has refused to commit the government to ongoing support for the programme until he sees the results of the current round.

Rumours have been circulating for some weeks that the money could be redirected to research infrastructure.

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In establishing the scheme in 1993, Peter Baldwin, the former education minister, said it would have a trial run for three years before the government made a decision on its future.

In the first year of the programme, teams of quality auditors visited every public university in the country looking at teaching, research and community service. Last year, the quality committee focused on undergraduate and postgraduate teaching and learning. It has still to report on its findings.

There was widespread criticism after the first round was completed when the top eight universities received most of the money. This confirmed the view of academics that well-off institutions with high-quality courses were being rewarded while those that could have used the extra money to improve their offerings received least.

Frank Hambly, executive director of the vice chancellors committee, admitted the quality money could be vulnerable in the present economic climate in Australia, given the government's vow that overall spending must be cut. But he hoped the government would maintain its commitment to the scheme.

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Carolyn Allport, president of the NTEU, said that under the union's proposal, both the amount and the method of allocating quality money would be changed.

She said the union believed that only $20 million should be allocated to the quality programme and then not by the current audit method but rather through a competitive and submission-based model.

The change should be made in 1996 or 1997, depending on whether the minister decided to continue the current scheme beyond its second year.

But Mr Hambly said vice chancellors did not support the union's plan. "The quality programme has been very beneficial for universities and we want to see funding continue at the existing level," he said.

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Every public university in the country had given its cooperation and support for the scheme on the understanding that completion of the full three years was fundamental to the validity and reliability of the quality committee's findings, Mr Hambly said.