Federal Education Minister Dan Tehan made the announcement just hours after all 39 universities condemned a decision by his predecessor Simon Birmingham to veto $4.2 million in recommended research grants, the first time a minister has used such powers in more than a decade.

Minister Tehan said the new test would improve public confidence in the $3 billion in taxpayer-funded grants the Australian Research Council would be handing out in the next four years.

At a late-night Senate estimates hearing, it was revealed 11 arts and humanities projects approved for funding by the council were blocked by Senator Birmingham, now the Minister for Trade, last financial year, including a grant of almost $400,000 for Australian National University researcher Robert Wellington.

In an email to staff this week, ANU vice-chancellor Brian Schmidt lashed the veto as "undermining" the council's peer-review process, and said the university would continue to advocate for humanities research funding "free from political interference".

"The competitive grants programs play a vital role in Australia’s research landscape, so it is essential that trust and confidence in their integrity are restored," he said, echoing concerns raised by peak body Universities Australia.

Under fire from both universities and federal Labor, Mr Tehan has pledged to make public any ministerial veto of research funding going forward, though he stopped short of committing to also publishing the reasons behind such a decision.

"The value of specific projects may be obvious to the academics who recommend which projects should receive funding, but it is not always obvious to a non-academic," Mr Tehan said of his new test.

Minister Tehan also flagged a review of the council's financial structure to see if it fit "national priorities".

But Nobel Prize-winning veterinary surgeon Peter Doherty slammed the national interest test as a "bad idea", questioning who would make the decision.

"If it's not in the interest of the coal and gas industry, it's not in the national interest?" he wrote on Twitter.

While universities, including the ANU, welcomed the minister's commitment to disclosing future interventions, they also cited a lack of detail around the new test.

Universities Australia chief executive Catriona Jackson said the sector would discuss what the minister had in mind but stressed all of the council's major grant schemes already had a "national benefit" test.

Ms Jackson and the tertiary union also raised concerns that, under the current system, academics were not notified if a ministerial veto had been used on their project - as was the case for the 11 academics who only discovered what had happened to their proposals by watching Senate estimates last week.

Ms Jackson said it was critical researchers knew if it was the council or the minister who had shot down their proposal so public servants weren't placed in "an impossible situation" and academics could be told whether or not their project had expert endorsement.

Final power over council grants rests with the education minister under the ARC Act, which came into law in 2001 and does not require an explanation.

Senator Birmingham has since defended his decision to reject the 11 proposals, singling out a University of Sydney project exploring "post-Orientalist arts at the Strait of Gibraltar" as something taxpayers were unlikely to want to pay for.

At the ANU, Professor Schmidt defended Dr Wellington's project and said he had committed the university to providing extra support so the early-career researcher could see it through.

The proposal, which aimed to study diplomatic gifts sent from France to other countries in the early-modern period, was expected to raise some groundbreaking questions in its field, Professor Schmidt said, and "deliver significant benefits by providing a new model for understanding object-based communication across past and present world societies".

"I am proud that ANU stands as one of the world’s strongest centres of humanities research," he said.

On Wednesday, the ANU launched a $10 million investment partnership with Canberra property company Hindmarsh, as the university looks beyond government funding for opportunities in the private sector.

ANU provost Mike Calford said the program would help advance research from the lab to consumer shelves and had already attracted investment from a number of other universities, including the University of Canberra. It hopes to grow seed funding to $50 million in the coming months.

Launching the fund, Minister Tehan described it as the missing piece in the jigsaw puzzle for Australian universities that would connect researchers with industry and create more local jobs.