A Canadian university is divided over the potential sale of an unusual asset - a 15th-century castle in the south of England.

Few universities in Canada own property that is older than the country itself. But Queen's University was given Herstmonceux Castle in Sussex - by an alumnus, chemical magnate Alfred Bader - in 1992.

In 1994, Queen's renovated it and turned it into a centre for international studies. That's when their troubles began - because Herstmonceux quickly became a sinkhole of debt.

The castle was supposed to be self-financing by charging 410 students Can $6,800 (Pounds 3,400) each per term. But after attracting only 160 students, it is instead losing Queen's Can $1.6 million a year. With all that red ink piled on top of recent, massive cuts to government funding that are hitting universities across Canada, it was recently decided that the castle was getting too expensive to operate. In the spring it was announced it would be sold off.

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Howls of protest immediately went up - particularly among students who had been to the castle. "That's crazy," John Taggart told Queen's student paper. "It's unbelievable. You'd never find a place better. It's like a fairy tale."

Pressure mounted quickly as Dr Bader stepped in with a further Can $1 million gift to help pay debts this year.

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Administrators and staff on campus questioned the rationale of sinking even more cash into a money-losing operation, at a time when cutbacks were forcing the university to lay off staff.

Faced with such a backlash, the university backed down and appointed a taskforce to re-examine the viability of the castle. Last month it gave a temporary reprieve until November to find a way to make Herstmonceux solvent, probably by attract-ing more students from other countries.

Like many things British, the castle, former home of the Royal Greenwich Observatory, stirs the emotions in Canada, as Bill McLatchie, task-force chairman, found out when he talked to students. "It is an unusually enriching experience for both the students and professors who go there," said the physics professor "and this no doubt derives in part from the historical milieu."

Even sceptics on the task force were won over. Biochemistry graduate student Max Tejada said he initially was highly unsympathetic to the castle as a money-waster. "But I came out thinking that Queen's was better served by using the castle to increase its international reputation."

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The donor, Alfred Bader, said he is leaving the decision to Queen's, and will understand if they need to sell it off. "I very much hope it will not be sold, but times are tough in Canada," he said.