Times ÖйúAƬ understands that ministers are looking at changes that would enable institutions to change their legal status quickly to allow share ownership - thereby making it easier for them to attract investment.

Currently, universities take various legal forms, including institutions set up under Royal Charter and those established as corporations following the demise of the polytechnics.

There is only one ÖйúAƬ institution that takes the form of a company with shareholders - the Royal Agricultural College - but it is a private limited company and its shares are not publicly available on the stock market.

Changing status is possible, but the process can be slow - for instance, chartered institutions need an Act of Parliament to do so.

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It is understood that the government is looking at legislation that could streamline current procedures. Such a move would continue the coalition's bid to open up the sector to the market, following on from its decision to grant the university college title to for-profit provider BPP.

John Boardman, a partner at law firm Eversheds, said that institutions limited by shares would be able to raise money quickly from investors and could be listed on the stock market, although they would also be open to takeovers.

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But he said that new laws were not entirely necessary. "What might be easier is to create a new body and to transfer the assets from institution A to institution B - these things are possible, with enough will," he said.

An Eversheds paper produced last year for Universities UK suggested a model where the existing institution kept its structure, remained charitable and continued to receive public money, while a for-profit company had ultimate control.

But Mr Boardman, head of Eversheds' education group, said the question of whether the government encouraged this method or opted for more radical legislation was less important than changing attitudes.

"What it could do is bring in legislation to enable a university to simply change to a public limited company, but I don't think it will do that - it is more about persuading people to think about things, which is far more important," he said.

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Roger Brown, professor of ÖйúAƬ policy at Liverpool Hope University, said the future legal form of universities was less relevant than the regulatory regime underpinning them.

Referring to discrepancies in the US system, he said: "What really gets up the noses of people in the US about for-profit ÖйúAƬ institutions is that for all the rhetoric about being more entrepreneurial and so on, students still have access to government-backed financial aid."

Ruth Farwell, chair of the GuildHE group and vice-chancellor of Bucks New University, warned that such contradictions already existed in the UK, with private providers not facing the same controls on places as public ones, despite some students having access to government support.

"If controls are not being relaxed on public institutions then there has to be some restriction on other parts of the sector that are in receipt of public funds," she said.

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A spokeswoman at the Department for Business, Innovation and Skills said that the number of students at private institutions currently eligible for student support was low.

She added that any changes to governance would have to be considered in the context of Lord Browne of Madingley's independent review of university funding, which is likely to report in October.

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simon.baker@tsleducation.com.