Hundreds of teaching jobs could be lost and academic standards threatened in Hungarian universities under a finance ministry austerity drive demanding budget cuts of up to 20 per cent.

Finance minister Lajos Bokros is calling for swingeing public spending cuts in health and social security as well as education. They are designed to tackle Hungary's massive national debt, estimated at around Pounds 20 billion.

The funding crisis is likely to precipitate a major university shake-up in the long term, with greater stress on capitalising on business opportunities and entrepreneurial skills.

Controversy over the size and extent of the cuts has raged since the Bokros programme was announced in March by the Socialist/Liberal coalition government, elected last year in the second free elections since the collapse of the communist regime in 1989.

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The government, which includes some of the communist politicians ousted from power six years ago during the country's first flush of democracy, ran into concerted opposition when it drew up specific redundancy targets for universities and their faculties.

Academics and faculty leaders from Hungary's 100 ÖйúAƬ institutions were enraged by announcements of figures such as the 380 staff the arts faculty of Eotvos Lorand University in Budapest was expected to lose.

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A successful legal challenge in the constitutional court led to a ruling that universities were autonomous bodies and the government did not have the power to direct a redundancy programme.

Agnes Peter, an assistant professor and head of the English department in Budapest University's School of English and American Studies, one of the largest with 1,250 students and an annual intake of 150, said: "We had to accept a 10 per cent pay cut, which in effect meant we made two senior members of staff redundant. Normally when senior staff retire I can create two new posts for junior staff, but I can't now do this."

The numbers of students in seminar classes, which had dropped to 16 as part of a departmental drive to improve staff-student ratios was now set to double. Opportunities for the brightest and best postgraduate students to begin their academic careers as junior lecturers would be lost."

Student standards of living will also be hit. The austerity programme includes proposals to introduce fees of 2,000 forints a month (Pounds 10) from September for students struggling to live on grants of between Pounds 35 and Pounds 60 a month - below the official poverty line of Pounds 80.

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Lecturing staff, who earn Pounds 130 to Pounds 250 a month, tend to moonlight - doing translation, interpreting or other work.