SCOTTISH universities are facing an unexpected £20 million cut to their budget, new figures show.

The cash, which will be taken from a fund which helps institutions make research globally competitive, was withdrawn on the instructions of the Scottish Government.

Last night, Universities Scotland, which represents university principals, described the move by the Scottish Funding Council (SFC) as "challenging".

The cut, revealed in the SFC's annual grant letter, comes just weeks after almost a third of Scottish university research was ranked amongst the best in the world after a significant improvement in quality.

A UK-wide exercise to assess the quality of higher education research has seen nearly 30 per cent of submissions from Scotland classed as "world-leading". In 2008 - the last time the rankings were compiled - just 15 per cent of Scottish research was rated so highly.

Alastair Sim, director of Universities Scotland, said: "This indicative grant letter from the funding council confirms, through careful reading, that £21.5m has been held back from universities next year.

"Universities have been working with the funding council to find a way to manage this challenging situation whilst protecting the extra places that were created to widen access. This can only be achieved by ending the global excellence grant for research and by making further savings from the resource for teaching.

"As this funding has been held back, rather than cut entirely, we are hopeful that the Scottish Government might be able to return it to universities, within year, so they can use it to generate a significant contribution to Scotland's economy."

Mr Sim said Scottish universities, which will get a total of £282m for research, were particularly concerned because the reduction has come at a time when standards have been rising.

He added: "The vast majority of universities have improved their performance compared to the last assessment and some have made significant strides ahead and in that context it is disappointing, even if it comes as no surprise, that research funding will be spread more thinly across universities rather than capitalising on the value of university research which has been independently found to deliver outstanding impact for Scotland's economy, society and culture."

A Scottish Government spokesman said the decision had been taken to give ministers more flexibility over budget priorities throughout the year.

He said: "The Scottish Government will be providing over a billion pounds in funding in 2015/16, having invested more than £7 billion in higher education since 2007.

"Next year our overall provision of funds for Post 16 education and training will rise, reflecting our commitment to new education and training facilities and the reforms that are part of Developing Scotland's Young Workforce.

"As expenditure can vary in the course of the year, we have asked the funding council not to allocate their budget for next year in its entirety in the first instance, as was made clear last year. This provides flexibility going forward to align resources where needed across our funding for post-16 education."

Laurence Howells, chief executive of the SFC, said the total funding package for Scottish universities was sufficient to support research developments in the future.

He said: "Universities make an enormous difference to Scotland through their teaching, research and innovation and we've seen this through excellent results for Scotland in the recent UK research assessment.

"We've also seen it in universities offering more places and creating new partnerships with colleges, giving people from a wider range of backgrounds more opportunities to get a degree.

"These all make a real difference to Scotland and this announcement of over £1 billion of university funding for 2015/16 will help to support this into the future."