Research shows there has been a massive increase in demand for health courses over the past decade. Training for these courses are the most expensive to run.

A Group of Eight research paper into shifting demand in disciplines - to be issued this week - warns of a potential $4 billion gap between federal funding and the cost of course delivery.

Meanwhile, cheaper courses to run, such as information technology, management and commerce, have fallen in popularity.

The paper questions how this rise in expenses will be paid for - calling on the government to deregulate fees in the same way it has deregulated university places, so students will pay a greater share when they enrol in more expensive courses.

Group of Eight executive director Michael Gallagher said the government had failed to plan for a potential financial double-whammy for universities arising from huge enrolment growth plus the fact that growth was concentrated in the more expensive courses.

This year, Australian universities have taken in record student numbers as the government removed caps on places.

''We actually don't think the government has done all the sums.

''It underestimated the scale of growth in the demand-driven system and has not factored in the shift to higher-cost enrolments,'' Mr Gallagher said.

The report warns that by 2020, if broad enrolment trends continue, the gap in course cost underfunding would grow from $2.8 billion to $3.9 billion. Mr Gallagher said universities would reach a financial ''crunch'' where they would have to turn qualified students away or ''sacrifice quality if they decide to churn them through''.

The report, Demand for Higher Education By Field, highlights dramatic changes in demand for university subjects over the last decade.

Between 2001 and last year, overall applications for a place at university rose 17.8 per cent or by just over 37,000. Applications across all health fields rose by 27,500 nationally, or 78 per cent.

Percentage growth was highest in dentistry - at 502 per cent, while nursing grew most by absolute numbers - at 10,441 places.

Applications for medicine grew by 65 per cent.

There were also substantial increases in demand for science, up by 38 per cent, and engineering, up by 38 per cent.

Meanwhile, applications in IT fell by nearly 9000 places, or 61 per cent. Management and commerce applications fell by 5760, or 15.4 per cent. Law also suffered a small decline of 2 per cent, or 231 applications.

Tertiary Education Minister Chris Evans issued similar figures on enrolment growth this year, showing a 10.2 per cent increase in demand for health subjects on last year's figure.

But on the issue of whether these expensive subjects would receive additional government funding, Senator Evans said the government was still considering the recommendations of the Lomax-Smith base funding review, having finished consultation on the report just last month.

Senator Evans said after a decade of ''cuts and neglect under the Howard government'' Labor had increased funding for teaching, learning and research at Australian universities by more than 50 per cent.

But the Lomax-Smith report also warns numerous subjects in the health discipline suffer the largest funding gap in terms of Commonwealth base funding. Health subjects receive on average $11,120 less in Commonwealth support per place than their actual cost to deliver.

Mr Gallagher said that in the context of declining international student fees and chronic levels of base underfunding, the government had to make a choice to better fund universities or let them earn more through deregulated prices.

''Frankly, it's illogical to maintain caps on prices in a system where caps on places had been dissolved,'' he said.

''It's first-year economics. You can't deregulate volume without deregulating price - or you get mad behavioural consequences otherwise.''

With Australia tipped to reach the Commonwealth's target of 40 per cent of people aged 25-34 to hold a degree well ahead of the 2025 cut-off, Mr Gallagher said the government had created huge community expectations that university was accessible.

But inadequate funding would mean ''universities might reach the point where they have to say to quite able students that they simply cannot accept them.''