The Wellcome Trust is extending its two-year freeze on new bids for university building projects to highlight its "great disappointment" at the cuts imposed by Government on university capital allocations.

In a letter sent to vice chancellors of universities with a strong interest in Wellcome Trust research funding, the trust says its governors have reviewed the moratorium on capital bids for research buildings and have "reluctantly" agreed that the policy should continue.

The letter says: "In light of the Chancellor of the Exchequer's announcement of Government cuts in university budgets - cuts which the Government expects the private sector to compensate for - the governors felt they had no option but to signal their concern by announcing their unwillingness to make funds available."

The letter goes on to say that the governors are exploring how they should "press their concerns" at the highest levels of Government. One vice chancellor said the letter was a "very welcome" registering by the trust of its own unhappiness with Government policy.

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The trust's programme director Michael Morgan explained that the moratorium on bids for capital funds was originally introduced two years ago because the charity was "overwhelmed" with applications and needed time to clear up the backlog. Dr Morgan said that capital funds from the trust for institutions and projects such as the Hinxton-based Sanger Centre for research on human genome mapping have totalled about Pounds 120 million for the past three years. The charity is spending about Pounds 60 million on the Hinxton site on which it is building the Wellcome Trust Genome Campus. In addition to its capital awards initiative, the trust also spends between Pounds 20 and Pounds 25 million per annum on funding research equipment.

Dr Morgan said: "We feel the Government is being short-sighted at a time when capital building for the support of university research is woefully inadequate. How are universities supposed to cope? The trust is very disappointed and we are drawing attention to this disappointment by extending the moratorium."

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A spokesman for the Committee of Vice Chancellors and Principals said that the move by the charity will be a disappointment to universities "but is fully understandable considering the cuts imposed by Government on the capital allocations of the funding councils".

The trust's letter also informs vice chancellors that if the charity's capital funding initiative is re-introduced, the governors will only be willing - except under exceptional circumstances - to provide accommodation for research which is already largely funded by the trust.

The charity's policy of considering "modest" requests for refurbishing of research space used by trust-supported researchers will continue, it adds.