Oxford’s reform plans were thrown into chaos last night when academics unexpectedly threw out proposals to hand strategic control of the university to outsiders.

In what amounts to a crushing blow for John Hood, the Vice-Chancellor, the academics voted by a massive majority against his amended Governance White Paper.

The vote calls into question the future of Dr Hood, the first outsider Vice-Chancellor of the 900-year-old university, who had staked his name on pushing through the controversial reforms. Not since Congregation — the university’s “parliament of dons” — voted overwhelmingly to reject a proposed honorary degree for Margaret Thatcher in 1985 has the university been so divided.

The 17th-century Sheldonian Theatre was again the scene of rancorous debate last night, as 28 academics sought to persuade colleagues that plans to switch to a modern corporate style of governance would change the university for better or worse. In the end, the opponents, led by Nicholas Bamforth, a law lecturer and Fellow of Queen’s College, won the day when 730 dons voted against the proposals and 456 voted in favour.

At times it sounded like a boardroom meeting, with references repeatedly made to the institution’s £1.2 billion value, and the vital role played by effective management structures. But the grand theatre was a far cry from any city conference room and the regal attire of the key participants bore little resemblance to the average business suit.

Sitting on his gilded throne, flanked by purple-robed proctors and the silver staff-wielding bedels, Dr Hood sat passively, as fellow after fellow took up the attack.

Mr Bamforth called on Congregation to reject the proposals as they would not bring more sovereignty, but would “reduce the number of directly elected members on key decision-making bodies”. He said: “There are plenty of things that are wrong with the university’s present administrative processes. But these are best resolved by administrative reform, not by the wholesale ripping up of our present constitution,” he said.

Dr Hood had recommended ending 900 years of self-rule by creating a board of directors with a majority of externally appointed members to approve the budget and oversee the running of the university. He had argued that his reforms would improve accountability and transparency and were crucial to Oxford retaining its international dominance.

His opponents, however, feared that, ultimately, financial interests could outweigh Oxford’s academic priorities, to the detriment of students, staff and the university.

Facing an £8 million deficit this year, they believe the move could mean the end of one-to-one tutorials and pressurise them to take more wealthy overseas students.

Professor Iain McLean, Politics Fellow at Nuffield College, pointed out that Oxford had few supporters outside the university and as a regulated charity, it must have accountable trustees. However, after three hours of debate, Dr Hood and his reformers were defeated.

Putting a brave face on the result, Dr Hood said it was part of “a lengthy and complex democratic process which has clearly reached an important stage”.

However, he hinted that the vote may be put again to all 3,700 members of Congregation in a postal vote next month, which would be decided by a majority and would be final. “That process permits a postal vote and a decision about that will have to be taken in the next few days,” he said. “It is for council or 50 members of Congregation to take that decision, which is entirely in keeping with the university’s democratic process.”

Privately, his supporters judged it unlikely that council would opt for a postal vote and risk another humiliation.

Dr Hood had been backed by the Higher Education Funding Council for England and by Lord Patten of Barnes, the Oxford Chancellor.

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