Ms Kelly said that vice-chancellors had a duty to inform the police where they believed that students or staff were breaking the law or committing “possible criminal acts”.

Freedom of speech and thought on campus did not extend to tolerance of unacceptable behaviour, she told the annual conference of Universities UK (UUK), the body representing vice-chancellors and principals.

The conference was held at UUK’s headquarters in Tavistock Square, Central London, where Hasib Hussain, 18, killed 13 people on a No 30 bus in one of four suicide bomb attacks on July 7.

“Following the London bomb attacks in July, we are all having to re-examine certain policies. One is how to respond to those using the freedoms of our society to promote terrorism and violence,” Ms Kelly said. “Freedom of speech or expression is one of the most fundamental rights that individuals enjoy. And higher education is a bastion of those values.

“However, freedom of speech does not mean tolerance of unacceptable behaviour. I believe that higher education institutions need to identify and confront unacceptable behaviour on their premises and within their communities.” Universities needed to be alert to the activities of student groups and “unafraid to set their own boundaries” about what was acceptable, using the law as support. “That means informing the police where criminal offences are being perpetrated or where there may be concerns about possible criminal acts,” she said.

“Universities and colleges have a duty to support and look after the moderate majority as they study, to ensure that those students are not harassed, intimidated or pressured.”

University leaders expressed concern at being asked to “police” their students but said that they accepted that the terrorist threat could not be ignored.

Drummond Bone, the president of UUK, said that everyone wanted to make sure that students were not intimidated. He said that universities were revising their advice on extremism and security in the light of the July attacks.

“I don’t think any university feels entirely happy about having a policing role over its own members. We are in a difficult situation,” he said.

A dossier prepared by Whitehall officials warned Tony Blair about a network of “extremist recruiters” circulating on campuses, directed at students and people with “technical and professional” qualifications.

It said: “Students and young professionals from better-off backgrounds have also become involved in extremist politics and even terrorism. They provide better recruits, as they may have the capability for wider and more complex proselytising.”

Mr Blair pledged last month to outlaw the extremist groups al-Muhajiroun and Hizb ut-Tahrir as part of his response to the London bombings. AlMuhajiroun’s founder, the radical cleric Omar Bakri Mohammad, was banned from Britain last month while on holiday in Lebanon.

The National Union of Students has already banned both groups from its campus unions, accusing Hizb ut-Tahrir of “supporting terrorism”. But the Muslim youth organisation has been accused of continuing its recruitment activities under a series of “front” names.

The Federation of Student Islamic Societies has given warning that Hizb ut-Tahrir would target “vulnerable” students when universities re-opened this month.

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