Exeter university confirmed this week it was making at least six academics redundant and scrapping one of its three postgraduate courses, blaming a lack of government support.
A TES poll last month found that 98 per cent of universities said they did not receive enough money to cover the costs of teacher training.
Professor William Richardson, head of Exeter's school of education, warned similar culls were likely across the country unless funding improved.
Small and medium-sized universities are under pressure to cut unprofitable courses as major research grants are increasingly being restricted to elite institutions. In all, more than 660 academic posts were cut at higher education institutions across Britain last year, according to the Association of University Teachers.
Exeter announced the closure of its chemistry and music departments in December, with the loss of 130 jobs, in an attempt to cut a pound;4.5 million annual budget deficit. Now the university's school of education is the latest to feel the financial pinch. Six academics working on postgraduate teacher training will be made redundant in the summer, accounting for a tenth of the overall teaching staff in the education department.
Exeter's joint key stage 23 postgraduate certificate in education, which has more than 70 students this year, will also be lost. Professor Richardson said the course cost the university pound;2,000 more per student to run than it received in funding. All students enrolled for September will transfer to the secondary PGCE course.
Other undergraduate and postgraduate courses at the school of education, which has more than 1,400 students in total, will be unaffected. Professor Richardson said: "Our commitment to teacher training is undiminished, but we cannot throw millions of pounds down the drain subsidising courses. The Teacher Training Agency has a stark choice: it either has to get to grips with this funding issue or see universities walk away from initial teacher training."
A report commissioned by the Department for Education and Skills last year revealed courses were under-funded by an average of 20 per cent. Last month's TES poll revealed that two-thirds of universities are intending to levy a full pound;3,000 top-up fee for student teachers in September 2006 to make up the shortfall.
Sally Hunt, AUT general secretary, said: "Our fear is that fewer staff could mean an increase in our members' workloads. It also runs the risk of affecting the quality of the course with students suffering as a consequence."
The TTA said it allocated primary and secondary places and it was Exeter's decision to use some of those places to offer a KS23 course. Since 200203, average funding per trainee for providers had increased by 13.4 per cent in real terms. It would continue to rise in the next two years and would be sufficient to meet demand.