Australian universities stand to lose $16 billion in revenue between now and 2023, according to new modelling by Universities Australia.
The peak body also has revised its estimates for the rest of the year, suggesting universities could lose $3.1 billion to $4.8 billion dollars in 2020, up from $3 billion to $4.6 billion.
Universities Australia chief executive Catriona Jackson said the COVID-19 pandemic would affect university finances for several years.
"We can't pretend that won't have a big impact. Not only does that revenue support the staff and facilities to educate the next generation of skilled workers, it also pays for much of the research and innovation that keeps Australia internationally competitive," Ms Jackson said.
"If there's less research on campus we will be less equipped to deal with crises like COVID-19 and bushfires in future."
It comes after Australian National University announced a $225 million shortfall due to reduced revenue and unplanned expenses due to the pandemic.
The University of Canberra revealed it would have a $33 million deficit in 2020, rising to a $60 million deficit next year.
Universities Australia previously warned that 21,000 jobs could be lost in the sector within six months as a result of the pandemic.
Ms Jackson said a large portion of Australia's research and development was in jeopardy as universities were taking on a growing share of the work.
"Until now universities have been increasing their investment in research and innovation. The danger is that if universities are unable to continue funding this activity, Australia's ability to innovate its way out of the COVID-19 recession will be severely hampered.
"You can't have an economic recovery without investing in research and development."