Chancellor Gordon Brown has given the first public sign that science and technology may be a significant winner in the comprehensive spending review.
But scientists fear that all research money could be switched to the research councils, ending the dual support system and leaving universities with less control.
Mr Brown told last week's House of Commons debate on economic and fiscal strategy that investment in innovation and science was a priority.
"This government recognises that we must invest properly in our economic and social infrastructure; in our schools and our hospitals, our transport infrastructure, our science and technology base and in building better housing and safer and stronger communities," he said.
Referring to the science and technology base, he said: "I hope that we will be able to show results in that area when we come to the end of the spending review."
Mr Brown's words were welcomed by Stephen Cox, executive secretary of the Royal Society. He said: "We are mildly optimistic, but we have learned to wait for the fine print."
John Mulvey, chairman of science pressure group Save British Science, added: "Gordon Brown's statement is a welcome sign that the government recognises it must make a move towards providing world-class levels of support." But SBS warned that the dual support system could be under threat.
The future of the system, supported by Lord Dearing and the House of Commons Science and Technology Committee, is rumoured to be part of the CSR discussion. SBS says the Treasury is exerting strong pressure for a complete transfer of funds to the research councils, while a source close to the Office of Science and Technology confirmed the question was being discussed by the Chancellor. Partial transfer of funds from the funding to the research councils to cover full overheads is also believed to be an option.
SBS said any plans to end dual support would not be a "simplification, but a nightmare", leaving research funding to one agency and reducing university discretion.
Universities currently receive undirected money from the funding councils to cover general laboratory equipment and infrastructure, and some discretionary money for basic science. They also receive grants from the research councils for specific projects.
Funding from the research councils has increased in real terms over the past decade, but the full indirect costs of research have not been met. This has meant more research but an inability to maintain laboratories. Dearing estimated it would cost Pounds 110 million per year extra for the research councils to pay the full indirect costs. Others have estimated up to Pounds 185 million.
A Treasury spokeswoman could not confirm whether dual support was being discussed by the Treasury.
A spokesman for the Higher Education Funding Council for England said: "The dual support system has been investigated many times and has not been changed. We do not believe there is any new reason why it should change now."
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