Queen's University Belfast could lose its Russell Group status unless the Northern Ireland government finds a way to avoid implementing a ?40 million cut to the region's two universities, a senior manager has warned.

Tony Gallagher, the university's pro vice-chancellor, said that the proposed cuts amounted to a 30 per cent reduction in funding for Queen's. "If we are cut by that amount there would be a threat to our Russell Group position," he said.

Professor Gallagher added that if the cuts were as deep as feared, "we would have to suspend all our planning processes and fundamentally rethink the size and shape of the university". He said that such a scenario would be "utterly disastrous" for the institution.

Northern Ireland's two universities, Queen's and the University of Ulster, have accepted ?28 million in "efficiency savings" but are lobbying against further cuts.

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The Northern Ireland Assembly will return from recess on 6 September to discuss the issue.

The Department for Employment and Learning has also said that it is "very unlikely" that it will be able to offer any "element of fee loan waiver or grant for Northern Ireland students studying in Great Britain" from 2012-13.

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This means that Northern Irish students will almost certainly have to pay up to ?9,000 to study in England, Scotland or Wales. The first and deputy first ministers of Northern Ireland have promised that current fees of about ?3,375 will only rise with inflation, making study at home substantially cheaper for local students than studying elsewhere in the UK.

In 2009-10, Queen's and Ulster had 28,720 places, 28,200 of which were taken by local students. A further 12,300 went elsewhere in the UK to study.

Adrianne Peltz, president of the National Union of Students-Union of Students in Ireland, said that fees of up to ?9,000 will "seriously deter" Northern Irish students from applying to the mainland.

This would "put additional strain on higher education places in Northern Ireland", she warned. Last year, the number of Northern Irish students applying to English universities rose by 10 per cent, she said.

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"We are also concerned that if more pressure is put on student places, entry requirements to universities in Northern Ireland will become artificially high," she added. "It is our experience that students from lower-income backgrounds will be squeezed out."

Professor Gallagher said that all the indications were that demand for places would increase, adding that "entry grades would go up to cope with that".

david.matthews@tsleducation.com