Higher education in the United Kingdom risks becoming a "two-tier system" because of a lack of public funding for Scotland's universities, the head of a leading think tank has claimed.

Professor Geoffrey Boulton, the general secretary of the Royal Society of Edinburgh, said the budget settlement announced by the Scottish Government less than a fortnight ago represented "a severe blow" for the sector and predicted it could lead to top academics leaving Scots universities for more generously funded institutions in England.

Mr Boulton also suggested that graduates should be expected to make some kind of contribution to the cost of their education, with means-tested grants also being introduced for low-income students.

The funding settlement for Scotland's universities over the next three years has sparked a furious political row at Holyrood, with opposition parties accusing the government of short-changing the sector.

However, ministers have responded by insisting that universities will receive an above-inflation increase in funding over the next three years - and pointing out that the proportion of the Scottish budget being spent on higher education is greater than under the previous administration.

An agreement has also been reached between the government and university principals that they will be in line for extra funding should the finances become available.

In a statement issued to The Herald, Mr Boulton said Scotland's universities were one of the country's "few internationally competitive strengths" and praised the groundbreaking "pooling" arrangements which have seen academics from different institutions working together to secure big-money research grants.

He said: "It is in this context that the proposed budgetary settlement for the universities is a severe blow.

"It reverses the trajectory of development that has made such an impression internationally and could inhibit the universities' capacities to capitalise on these latter gains.

"It would undo much good if the impression of a system under threat were created internationally."

Mr Boulton added: "It is also unfortunate that the proposed settlement coincides with the advent of top-up tuition fees in England, and could realise the outcome that pooling was designed to avoid: the loss of the best researchers and groups from Scotland to better-funded English institutions.

"We must do all we can to avoid the emergence of a two-tier system in the UK, with the lower tier being north of the border."

A bill to scrap the graduate endowment, which Scots students have to pay once they leave university, is going through parliament and there are plans to reintroduce maintenance grants, beginning with part-time students.

But Mr Boulton said the absence of a private contribution to the cost of higher education amounted to "a public subsidy to the better-off".

"Although free higher education' is a seductive slogan, we should think hard about where the balance of benefit lies, and whether a targeted approach of, for example, a graduate tax supplemented by means-tested grants for disadvantaged applicants, might be the most rational way forward."

A government source insisted Scotland's universities remained competitive and were well-funded. The source said: "Over the three-year spending review period there is a real terms increase in university funding and we've also increased the percentage of government expenditure on higher education."