Budget cuts have taken a bite out of one of Australia’s top research bodies.

The Australian National University has announced it will sack ten per cent of its workforce to cope with cuts ordered by previous Higher Education Minister Craig Emerson. It will also ramp up undergraduate numbers by 12 per cent to 2015 to get funds flowing again.

ANU Vice-Chancellor Ian Young says it is possible they will not be able to take on as many undergraduates as they would like to pad out the coffers, with possible changes on the way to funding models under new Higher Education Minister Kim Carr.

"If there are changes to the demand-driven system, we may not be able to increase the number of undergraduates," Professor Young said. "Obviously if the world changes we will need to be flexible enough to accommodate that in this package."

Senator Carr says he may adjust the funding model, which currently allows universities to take on as many first years as they deem eligible, to a system which requires higher admission standards or a cap on numbers to make up savings in the budget.

Professor Young said he fully supported Senator Carr's suggestion that growth in student places should be stopped, saying "the question is, could you put a cap on the number of students and then redistribute the extra money to improve quality?"