Underfunding of universities and colleges in Wales is the key issue that needs to be addressed by the Welsh Assembly's higher education review, a national survey has found.
A preliminary report indicates that low levels of funding compared with England and Scotland are affecting almost every aspect of Welsh higher education.
Responses to questionnaires sent to a wide variety of organisations in Wales reveal concerns about whether Welsh higher education can remain competitive without more public investment.
The review needs to consider whether more money is needed to bring Welsh institutions up to speed in computer and information technology developments, to bring about restructuring, maintain quality and boost research and technology transfer, the report on the findings says.
Respondents felt underfunding affected "quality, estates, the ability to recruit and retain students/staff, and the scope to contribute to economic prosperity, culture, health and the social development of Wales", the report adds.
Sir Adrian Webb, vice-chancellor of Glamorgan University and chairman of Higher Education Wales, the organisation representing vice-chancellors and principals, said more money was also needed to help Welsh institutions market themselves to students in England and Scotland.
Last week's Welsh recruitment figures from the Universities and Colleges Admissions Service showed a 3 per cent drop in students from England and 6.3 per cent from Scotland. Overall, recruitment to Welsh institutions was down by 3.6 per cent.
Sir Adrian said: "We believe the Welsh Assembly ministers are trying to be very helpful, and they understand the situation."