Universities are facing challenges to the quality of teaching they give students as they suffer from an annual funding shortfall of almost £60 million.

The institutions are supposed to receive on average £7,500 from the Scottish Government for each student they recruit.

However, there are currently 10,000 students in the system who are only getting funding of £1,800.

It is caused by a cap on the number of publicly-funded Scottish students at university - but they can recruit additional applicants at the lower tariff - known as fees-only students.

However, rather than being a safety net, the concern is fees-only students are increasingly used as a way of expanding Scottish student numbers on the cheap.

A spokeswoman for Universities Scotland, which represents university principals, warned the underfunding was having an impact.

She said: "High levels of fees-only students in the system, along with reductions in teaching grant, make it more challenging to offer every student the quality of experience they deserve.

"There needs to be a conversation about what level of public funding is necessary to deliver the quality of higher education that our students deserve, our employers expect and our economy needs."

Institutions are particularly concerned about the shortfall because it comes at a time when the sector is facing a 3.5 per cent funding cut for 2016/17.

Three Scottish universities have already announced job cuts this year as part of moves to save millions of pounds in the face of cuts and rising costs.

There are also fears Scottish universities could fall behind their counterparts south of the border who get £9,000 for every student they recruit because of tuition fees.

Mary Senior, Scotland official for the UCU lecturers' and support staff union, called on the Scottish Government to direct more public money towards the sector.

She said: "The increasing differential between the costs of teaching provided through government and the actual costs of delivering this teaching needs to be looked at, particularly in light of the most recent spending round which saw an overall cut in the higher education budget.

"The answer is not to follow the unfair model of tuition fees, nor for universities to sack the teaching and research staff who make Scottish universities world leading.

"We believe higher education should be publicly funded and that Scotland needs to generate more public funding for our universities."

Vonnie Sandlan, president of student body NUS Scotland, called for an expansion of higher education to ensure there were sufficient places for students.

She said: "We’d be really concerned if high levels of fees-only students meant any erosion of the support services or teaching quality that all students have access to while studying.

"Having this number of students with lower funding has meant thousands more students are able to take up a place at university, but that can’t come at the expense of quality or experience for students."

Laurence Howells, chief executive of the Scottish Funding Council (SFC), said universities were able to recruit extra students as part of a long-standing arrangement to create flexibility in the admissions process and provide more students with a place.

A Scottish Government spokeswoman added: "Universities have discretion to recruit a number of home students over and above the number of funded student places allocated by the SFC.

"We have invested over £4 billion in the higher education sector over the last four years and will continue to invest over £1 billion in our higher education institutions in 2016/17 ensuring that all of our institutions receive financial support to enable them to deliver high quality teaching, world class research and knowledge exchange."