The links between teaching and research go beyond the simple view that "good research is necessary for good teaching", according to a study commissioned by the funding council.
The finding will muddy the waters of the Treasury-driven transparency review of spending in British universities and colleges, which aims to identify the true costs of teaching and of research.
Bahram Bekhradnia, head of policy at the Higher Education Funding Council for England, said: "We wanted to know whether there were other things to take into account by examining the claim that good research is necessary for good teaching."
The report, by a team led by JM Consulting, is thought to be the first systematic study of the links between teaching and research in British higher education.
It found that exposure to cutting-edge research directly benefits some levels and types of study, that developing a student's attitude of inquiry also directly benefits study and that indirect benefits come from the way in which research opportunities attract high-calibre staff who then take part in teaching. There is a further benefit for teaching with research money enhancing facilities that can also be used for teaching.
The report criticises universities and colleges for failing to manage these relationships in a strategic manner.
"Formal institutional policies to manage a direct academic relationship between research and teaching are sometimes weak. This reflects a general need for higher quality strategic human resource management in the sector," the report states.
Mr Bekhradnia said: "We think that all teachers ought to have had some exposure to research. There is also a duty on academics to be engaged in scholarship."
However, the relationship between teaching and research will not, under present plans, be recognised by the transparency review. It requires every university to identify its spending on teaching, research and other activities separately.
Once these costs are identified, the funding councils can make a case to the government for more money. Initial results show that unpaid overtime is sustaining higher education.
The United Kingdom's funding councils consider teaching and research separately, assessing and funding them as individual activities. In most other countries, however, the two activities are viewed and funded together.
"Staff and institutions are almost invariably keen to engage in research because it provides strong esteem drivers and is perceived to bring broadly based institutional and individual benefits. This desire is reinforced by external assessment and public funding approaches," the report notes.
"Teaching is also a strongly-valued activity for academic staff but it is less overtly driven by public policy. The role of teaching is changing, however, under the influence of the diversification of the student population, pressure on the unit of resource and new technology."