Alan Smithers and colleagues from the centre for education and employment research today published a major report on teacher retention commissioned by the Department for Education and Skills.
The university says its education department is not financially viable. A low quality rating for its research means that it does not receive any national funding.
But Professor Smithers said research contracts with other bodies meant the department had the highest research income of any in Liverpool's faculty of social and environmental studies.
He was critical of the research assessment exercise, the national system for grading departments. He believes it fails to recognise the value of work that has a direct impact on practice in schools or government policy.
"Users want up-to-date accurate information immediately, as a basis for evidence-based policy making or practice. The kind of publications that get that kind of information to potential users very quickly do not seem to be rated very highly by the RAE," he said.
Taryn Rock, the university's director of corporate communications, said most of the contracted research cash was generated by the department's centre for research in primary science and technology, which is being retained. She said the education department, which received a 3b rating, had no future. Institutions need a rating of 4 or above to receive funding.
The education and employment research centre has one more year at Liverpool to complete other contracts, before moving to another, as yet unknown, institution.