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The vice chancellor of Oxford University is warning the institution will face a funding gap if ministers adopt the proposals of a review into higher education funding.

On the university website, Professor Andrew Hamilton writes that, even if tuition fees rise, those funds could be cancelled out by teaching grant cuts.

Oxford students are demonstrating against the Browne review proposals.

Business Secretary Vince Cable has cancelled a planned speech there.

He called off his visit to a university event after taking advice about the security situation and likely disruption a mass student demonstration would cause.

More than 600 students are staging a demonstration in the middle of Oxford.

In his website posting, Professor Hamilton said the Browne Review had brought "a significant piece of analysis and broader thinking about higher education funding".

But even with the higher tuition fees recommended by Lord Browne, the university looked set to face a shortfall in the funding of its distinct tutorial system - where students are taught one-on-one or in very small groups.

This was because of the 40% cut to non-research university funding announced in the Spending Review, he said.

Funding for research and science is being maintained in cash terms.

Professor Hamilton wrote: "Put simply, the money the state would make available in loans to support the higher fees envisaged under Browne would be largely recycled from the deep cuts to the teaching grant that flow from the CSR [Comprehensive Spending Review].

"This means that, if fees were raised to £7,000 a year - a figure that has featured prominently in Browne and in government comment - no additonal income would come to the university."

He said it cost about £16,000 a year to teach an undergraduate at Oxford, with half of that coming from tuition fees and public funding.

"The reality is that current proposals - the combination of Browne and CSR - do little to significantly narrow the gap and, in some variations, actually increase it."

He said the university was going to have to do all it could to find additional resources to make the tutorial system more financially sustainable, saying philanthropy would play a key role.

The government broadly supports the findings of the Browne Review, released earlier this month, which said tuition fees should rise.

But the coalition partners have been wrestling with the details - particularly with where a cap on fees should be set.

The government is expected to set out its official response next week.