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CAMBRIDGE and Oxford now rank among the top three universities in the world, second only to Harvard in the US, according to the latest global rankings published today.

Both British universities have moved up in the rankings for 2006, with Cambridge knocking the Massachusetts Institute of Technology off the No 2 position and Oxford advancing from fourth position to third. MIT is tied for fourth place with another US university, Yale.

The findings will bring cheer to Britain’s higher education sector at a time when some universities are giving warning that chronic underfunding of undergraduate teaching, poor cost recovery on research contracts, salary rises and increased administration costs are pushing their accounts into the red.

This week Oxford said that it was facing a “grave deficit” in its teaching accounts and that an increase in tuition fees was inevitable if standards were to be maintained.

Eric Thomas, Vice-Chancellor of Bristol University, said yesterday that the new £3,000 tuition fee limit was not enough to fund higher education and suggested it should rise to £5,000 a year.

Despite these concerns the university world rankings, produced by The Times Higher Education Supplement (THES), confirm Britain’s position as a centre of global educational importance.

Harvard, whose endowment of $26 billion (£13.8 billion) exceeds total annual funding for all British universities, tops the table but its lead over its closest rival has fallen, from 13 per cent last year to just over 3 per cent over Cambridge this year.

Britain has three universities in the top ten, with Imperial College London moving up from thirteenth place to ninth. All others in the top ten are American.

London’s dominance was confirmed with three other universities in the top 50, the London School of Economics at 17 (down from 11 last year), University College London at 25 (28 last year) and Kings College London moving from 73rd last year to 46th.

In all, Britain has 29 universities in the top 200, up from 23 last year. It also has more new entrants than any other country, with Cardiff and Southampton both at 141, Reading at 190 and Aberdeen at 195.

The rankings were based on a survey for the THES of 3,703 academics worldwide, who were asked to identify up to 30 universities best for research within their own field of expertise. This ensures that the rankings are topical and liable to change from year to year if institutions do not maintain research standards.

The table also includes data from 736 graduate employers from around the world, as well as the ratio of faculty to student numbers and a university’s success in attracting foreign students and internationally renowned academics.

The five factors were weighted and transformed into a scale giving the top university 100 points and ranking the others as a proportion of that score. Ian Leslie, the Pro-ViceChancellor of Cambridge, said: “It is very reassuring that the collegiate systems of Cambridge and Oxford continue to be valued and respected by peers, and that the excellence of teaching and of research at both institutions is reflected in this ranking.”

John Hood, Vice-Chancellor of Oxford, said: “Our place among the handful of truly world-class universities, despite the financial challenges we face, is testament to the quality and the drive of the members of this university.”

John O’Leary, Editor of the THES, said that the rankings underlined the fierce competition between leading universities.

“The presence of so many American and British universities at the top of the ranking owes something to the dominance of English as a world language in academic life as well as in business, but by every measure these are outstanding institutions.

“Thirty different countries are represented in our top 200 so international competition is still intense — the leading Chinese universities have made real progress this year, for example, and will no doubt challenge the leaders in years to come,” he said.

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