Academics rejected the latest pay offer from university bosses yesterday, thwarting hopes of an immediate end to the industrial action which has hit thousands of students.
The AUT and NATFHE unions turned down the offer of a 13.1 per cent pay rise over three years.
Union leaders warned they could intensify the industrial action, which has seen exams cancelled and coursework left unmarked in a nationwide boycott of assessment. The pay dispute has disrupted exams at 40 per cent of British universities, with lecturers refusing to set, mark and invigilate papers.
More than 1,000 students have had exams cancelled at B irmingham University including 64 in their final year, putting their chances of grad-uating at risk.
The university has angered union bosses by cutting ten per cent from the salary of those lecturers engaged in the dispute.
A further 150 students have been affected at Aston University where students have l aunched a campaign demanding lecturers and university bosses to stop using them as "pawns".
AUT general secretary Sally Hunt called for a new two-year deal which would give academics at least a ten per cent rise.
There should then be an independent review to establish the funding which will be available for pay rises in the third year, she said.
"We are disappointed that things have failed to move on enough," she said.
"Their latest 'final offer' is unacceptable as it stands, but we in AUT still believe that a national settlement is possible with further negotiation.
"We and our colleagues in NATFHE are determined to resolve the dispute and hope that the employers will commit to further talks in the interests of both students and staff."
The unions held internal meetings yesterday to decide how to respond to the latest offer from university employers' group UCEA. Both the AUT and NATFHE union executives decided last night's 13.1 per cent three-year offer was not good enough.
Roger Kline, head of the universities department at NATFHE, said: "Employers need to understand that if the offer is not improved significantly, the situation will worsen considerably and the industrial action is likely to be escalated.
"If the employers leave us no alternative, further action could include strike action and a toughening of other sanctions," he said.
Higher Education Minister Bill Rammell called for the offer to be put to a ballot.
Academics have been refusing to mark coursework or set exams as part of the boycott, which began in March.
Both unions originally demanded a 23 per cent rise over three years.
They claim academics' pay has fallen far short of that of other comparable professions, such as doctors, and want a bigger share of the extra money universities will receive from top-up fees. Academics are paid an average of about £35,000 a year.