Melbourne 51¹ú²úÊÓƵ Private has been warned that it must develop a research profile or stop calling itself a university.

In a statement released with the report of a government-commissioned review of MUP, Lynne Kosky, Victoria's minister for post-compulsory education, said the private university had not met the research requirements set down in a 1998 government order giving it permission to begin.

Ms Kosky said the original development plans for MUP, which is a wholly owned venture of the 51¹ú²úÊÓƵ of Melbourne, envisioned a separate company with specialist professional schools operating as subsidiaries. It was intended to attract corporate investors and a core of academic staff was to be recruited, including professors.

The minister noted there were now no separate schools, no academic staff and MUP had not attracted equity partners.

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Ms Kosky's hardline stance contrasted with the supportive recommendations from the review. The report says the government should approve the hybrid model and accept that MUP was a different organisation from the original. MUP should continue to operate under current conditions and name, with the expectations it would meet the earlier requirements, including accepting a "client-driven concept of research outcomes".

Ms Kosky, however, was adamant that any institution calling itself a university would have to undertake research.

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Alan Gilbert, Melbourne's vice-chancellor, said he regretted the minister's response and warned of the danger her comments might imply "for the capacity of any university in Victoria to respond creatively to opportunities in an emerging knowledge economy".

"Imposing one view of a university, when there is a wide range of possible alternatives around the world, may be unwise," he said.

But the minister's comments were welcomed by some of the staff. Melbourne psychology lecturers Simon Cropper and Michael Jonston said they and their colleagues hugely enjoyed Ms Kosky's response, which deserved the applause not only of the academy but of every individual "who sees life as something more than fiscal exercise".

"It is a marvellous irony to see a politician stand against a vice-chancellor in defence of academic values," the academics said.

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? Federal education minister Brendan Nelson has told higher education that it cannot expect increased funding.

Dr Nelson told ABC radio that "most of the people who understand the higher education sector feel they cannot continue the way they are".

"It's my intention to spend the best part of this year in a collaborative and consultative manner, putting together a programme of reform which will perhaps enable each university to achieve its best potential," he said.