The director of the Australian National University's John Curtin School of Medical Research has been moved out of his management job and ordered to go out and raise private funding to keep research projects going.

In what appears to be an escalation of the ANU's financial and industrial woes, Brazilian-born, American psychiatrist and world-renowned obesity and depression expert Professor Julio Licinio will pass on day-to-day operations of the school in order to establish the John Curtin Medical Research Foundation and set up a new national centre for medical discovery, translation, implementation and policy - ostensibly to attract external funding.

The move comes as ANU Vice-Chancellor Ian Young this week makes a decision about the School of Music in the face of overwhelmingly negative community reaction to his plans to cut $1.3 million and 12 staff.

Professor Licinio, who works in partnership with his wife and depression expert, Professor Ma-Li Wong, was a major international recruitment coup for the university in mid-2009. He said he was aware that the JCSMR had failed to make itself competitive in the race for philanthropic funding across the tertiary sector.

Professor Licinio admitted ''cultural change'' from the historic reliance on Commonwealth block grants - which have been greatly diminished over the past decade - was slow to come.

''I know it is part of the job to attract outside funding, but it is an uphill battle to establish a philanthropic funding stream from scratch,'' he said.

The John Curtin School is the research jewel in the ANU's crown, having forged a national and international reputation for cutting-edge biomedical discoveries and been associated with three Nobel prize winners.

But his future at the JCSMR is now uncertain amid tensions between research teams over dwindling government grants and university support.

It is believed Professor Licinio, who retains the title of director - but who passes on his duties to a deputy director of operations to be appointed by Professor Young - has until the end of the year to complete the task.

ANU management is believed to have been concerned by Professor Licinio's failure to attract significant financial support for his research on the links between depression and obesity, and was also aware of a lack of staff support for his position. Professor Licinio said his research in the relatively new field of obesity and depression would require time to build up financial backing.

While his move has yet to be announced at the ANU, a spokeswoman for Professor Young confirmed yesterday ''Professor Licinio has been is in discussion with the Vice-Chancellor and the college dean about a new structure for management of the John Curtin School of Medical Research that would see him focussing on two major projects, raising the profile of the school's new foundation and establishing a national centre for translational medicine, while someone else at the school takes on responsibility for day-to-day operations''.

Professor Licinio said some research teams within the school were flourishing in terms of attracting external financial support - as was the case with immunology. He admitted there had been tensions within the school regarding funding streams and some of his budgeting decisions.

''The simple fact is we have to live on less institutional funding and rely more on private income … Some people have been a bit indignant about this.''

Professor Young's March announcement that the ANU would need to cut $40 million and 150 jobs by the end of the year - a decision he later abandoned - had further increased stress among researchers at the John Curtin School.

Professor Licinio denied he was in direct conflict with management, saying ''I am very enthusiastic and quite prepared to go out and seek private income for the school.''