Lecturers at the University of Oxford will have to compete for "merit payments" if a new career-progression scheme is adopted.
Under the proposals - the fruit of five years of consultations - the title of reader would also be phased out and internal promotions to professorships would cease.
A document by Oxford's task force on academic employment published in the Oxford University Gazette, the institution's official journal, says: "Merit pay would be available to tenured lecturers on a competitive cash-limited basis. Successful applicants would receive an additional recurrent payment of £2,585 per annum."
The report recommends that in future there should be only two titles for senior academics - lecturer and professor - and no new appointments made to reader posts.
"There would be no system for promotion from lecturer to substantive professor. Such posts would only be available through international competition for specific vacancies or new posts," it adds.
In a debate on the proposals in 2008, Geraint Jones, lecturer in computation, said that the money needed for merit pay could be put to better use. "It would buy at least one really distinguished academic every two years or so," he said.
Some respondents to the consultations suggested that if the reader title were scrapped, all tenured academics should be allowed to call themselves professor.
They said a lectureship at Oxford was "clearly of a different nature" from lectureships elsewhere and often attracted candidates who held chairs at other universities.
Bernard Silverman, the former master of St Peter's College, Oxford, said: "The necessary standard for promotion to professor at most other UK universities is lower than our standard for attaining a readership, and in many cases, including in some strong research institutions, it is considerably lower."
Others pointed out that the basic lecturer salary at Oxford was higher than the minimum professorial salary at many other institutions, and close to the median professorial salary in Russell Group universities. But the task force report says that extending professorships in this way would devalue the title "unacceptably".
"A (world-leading) rating in the 2008 research assessment exercise might be considered a reasonable measure of the level required for conferment of the title of professor at Oxford, and only about one third of Oxford's research achieved that level," it adds.
Gill Evans, an expert in the governance of the universities of Oxford and Cambridge, was concerned by the absence from the proposals of career advancement for scientists on short-term contracts.
"This is a big and important section of the academic community and Oxford depends on them for a big chunk of its international research reputation," she said.
"Government objectives about Britain cutting a significant figure in the sciences will never be met until the leading research universities bite this particular bullet."
Professor Evans added that merit pay was "always divisive".