The Open University may have to shed up to 350 jobs and completely reorganise its regional structure because of a financial crisis. In one year the university has gone from a 1994/95 surplus of Pounds 9.2 million to an undisclosed deficit for 1995/96.

In an address to OU directors this month, vice chancellor Sir John Daniel said that there would be fewer senior posts after the change which was necessary to restore "the financial equilibrium that has been knocked off balance by Government policy." Areas for essential action include the university's student, tutorial and regional services (STARS).

STARS is the first point of contact for 150,000 students and 8,000 associate lecturers. "It is a vital area to get right. It absorbs very, very large amounts of money," said Sir John. A paper by regional services director David Stewart reveals that STARS costs are to be cut by a quarter over five years.

In Dr Stewart's model the 13 centres are to be reorganised into an unspecified smaller number of group regional centres with certain functions concentrated on fewer sites "using the advantages of new technology". It is hoped that a skeleton staff will be maintained at all 13 centres, but there are fears that some may close.

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There will be a 30 per cent reduction of "staffing points" in regional academic services from 2,400 to 1,650, under Dr Stewart's model. This could mean up to 350 jobs lost, with senior management most vulnerable. The university is already running an early retirement scheme with enhanced benefits and has frozen new posts.

Sir John could not comment but a spokeswoman said that plans are not yet finalised. "We're subject to ÖйúAƬ Funding Council cuts," she said.

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Scottish regional director John Cowan insisted it would be inconceivable for the OU to pull out of regional centres. "Like other universities, we'll have to tailor what it is we have to offer," he added.

Other action planned includes: * Assessment. A move to a "more modern and cost-effective assessment practice". "Most deans think we over-assess," Sir John admitted.

* Telephone inquiry service. Sir John said: "In common OU style responsibility for this area is thoroughly diffuse. Our desperately bad record in answering the phones in recent months must goad us into action."

* Mailshots. "We can't ignore the widespread feeling that we waste money on sending out too much material and that much of it annoys students and tutors."

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* Support. "There is a huge degree of frustration among heads of central academic units that the relation between what they ask for from support units and what they are asked to pay for is far too vague," said Sir John.