The Government must urgently increase investment in higher education as British universities “are all feeling the crunch”, an education chief has said.

Dame Sally Mapstone, president of Universities UK (UUK), which represents 141 higher education institutions, said universities “stand at a fork in the road” and the system could “slide into decline” without urgent action.

Addressing hundreds of vice-chancellors at the UUK’s conference, Dame Sally said the organisation’s blueprint – due to be published in the coming weeks – will “make the case that it is a solid investment not a drain on public finances”.

Her plea comes after university leaders have warned of significant financial concerns as a result of frozen tuition fees paid by domestic students and a drop in overseas students.

But Education Secretary Bridget Phillipson has told vice-chancellors that she cannot promise “painless” solutions to the financial challenges they face.

Dame Sally told the conference in Reading on Thursday: “I recognise that so many universities represented in this room are already making very significant cuts to balance our budgets.”

She said reform may open opportunities to do things differently in the sector, but it also means “hard choices” about what universities should stop doing.

Dame Sally added: “We cannot continue to do more with less.”

The previous government raised the cap on university tuition fees in England to £9,000 a year in 2012 but it has been fixed at £9,250 since 2017.

During her speech at the University of Reading, Dame Sally said the current income contingent loan system in England was designed to recognise that higher education is “both a public and a private good”.

She said: “The state benefits from you going to university but so do you, and therefore the system should be funded as such. However, over time through changes to loan repayment terms and the removal of maintenance grants in England, this balance has shifted and, in our opinion, shifted too far.

“The Exchequer now only contributes to 16% of the cost of funding a student through higher education with the rest, 84%, picked up by the graduate in England. This balance needs redressing through increased Government investment.”

The UUK’s upcoming blueprint will set out plans for a “reset” of the university sector including a rebalancing of responsibility for funding in England.

In a video shown to vice-chancellors at the conference on Thursday, Ms Phillipson said: “These are complex problems. There are no easy answers or quick fixes.

“So I can’t promise painless or immediate resolutions, but I do promise that these issues will get the attention and the commitment they deserve.”

It came after Baroness Jacqui Smith – universities, skills and apprenticeship minister – told the conference on Wednesday that the Government is considering “all options” amid reports of “financial peril” facing universities.

The higher education minister said she was committed to ensuring plans are in place to mitigate risks to institutions which are “under financial strain”.

But Baroness Smith said the Government is looking at how it can help in a way where the state does not take on the “whole responsibility” of funding.

Addressing university chiefs on Thursday, Dame Sally said: “We need to continue to be very clear about the magnitude and urgency of the funding sustainability challenge that so many of us are having to confront on a daily basis and I give you my word that UUK will actively and urgently continue do that.”

She added: “The most recent data shows a £1.7 billion deficit across the UK in teaching alone, with a further £5 billion loss in delivering research.

“I know from my visits to universities across the whole of the UK that whilst the exact cause of the funding challenge varies, we are all feeling the crunch.”