The London School of Economics has rejected claims that it is considering going private.
Student leaders at the institution have reacted with alarm to the news that a briefing paper prepared for the LSE's governing body looked at the issue of privatisation.
The LSE says it has not developed any plans to alter the way it is funded.
Universities in England are facing a major upheaval following the announcement of 40% sector cuts.
They are examining their options as they wait to hear the government's detailed plans for the funding of the sector following the Browne Review on student fees.
Ministers have made it clear they want students to pay more towards their education, once they have graduated, but recently ruled out allowing universities to raise fees without limits.
Now universities are waiting to see where a cap on fees will be set.
Under the cuts to teaching grants for universities, the state would only pay directly for teaching in science, engineering, technology, maths and possibly some languages.
Details are due to be set out in December.
Becoming a private institution would mean a university could charge above fee limits set by the government - currently a maximum of £3,290 a year in England.
The change would also mean universities did not have to follow guidelines on widening access to higher education and the provision of bursaries for poorer students.
The London School of Economics said the issue of privatisation had been mentioned in a briefing paper for the governing body but had not been put up for a decision by the school - nor was it likely to be.
A spokeswoman said: "LSE is a university which relies, in part, on public funding and we have not developed any plans to alter that arrangement.
"At a time when government support for higher education is being sharply reduced it is sensible to survey the financial landscape in its entirety to understand the position of the sector as a whole.
"But it would be entirely wrong to isolate any part of that survey and portray what is background information as a preferred course of action. We want the whole LSE community to take part in a collective discussion about future spending decisions - none of those decisions have been taken."
The director of the LSE Howard Davies said: "I have so far seen no arguments which convince me that the School and its students would be better off as a result of 'going private'".
Charlotte Gerada, general secretary of the LSE Students' Union, said:"The founders of the LSE were committed to social justice and critical in the formation of the modern welfare state.
"It comes as a shock that the LSE would even consider going down the path of making LSE a for-profit institution with no obligation to follow Hefce [funding council] regulations to cap fees, increase widening participation, or provide bursaries."
Mike Cushman of the lecturers' union, the University and College Union (UCU), said the group was committed to seeing the LSE remain as part of the UK national higher education system.
"Privatisation runs totally counter to LSE's role as the leading social science university; it would have to follow the agendas of corporate funders," he said.
"We believe that developing access for all potential students regardless of background is essential: LSE must not become a finishing school for the wealthy specialising in delivering bright, but uncritical, graduates to the finance industry."
Recently, Cambridge University also dismissed as speculation reports that it was considering going private .