Universities Scotland has condemned a new condition for grants from the Scottish Higher Education Funding Council as "heavy-handed and unnecessary".
The Scottish principals have long complained that too high a proportion of Shefc funds is top-sliced for particular initiatives, arguing that more should come through the core grant.
Enterprise and lifelong learning minister Wendy Alexander said that in return for less top-slicing, institutions must tackle a number of key areas, including widening access and modernising management.
Shefc has introduced a new condition for funding, linking the main teaching and research grants to satisfactory progress on key policies. After a consultation, it dropped its proposal to monitor institutions' progress through their strategic plans. Institutions feared this would lead to Shefc "approving" parts of the plans, interfering with the governing bodies' rights and responsibilities.
Shefc will give institutions the option of providing the necessary information in a separate statement, so long as it is consistent with the strategic plan.
A Shefc letter to institutions says: "We believe this is a way forward that allows the council to be assured that institutions are addressing the areas that will be covered by the condition of grant, while addressing institutional concerns about a perceived threat to their autonomy."
Universities Scotland continues to question the need for the move, but a spokesperson said: "The principle of reducing top-slicing is something we are absolutely delighted about. We would like to see more coming through core funding, but in the past year, core funding rose at a slower rate than the increase in the Shefc grant."