Universities should seize the rapidly growing international market in online learning, but doing so will require investment, a panel of experts has said.
The final report from the government's Online Learning Task Force, which includes experts from Microsoft, Apple and Pearson, calls for an injection of £100 million over five years to expand the UK's online provision and boost its brand.
It warns that private providers are moving into the international online market "quickly and aggressively".
Meanwhile, the growing use of IT in schools is changing students' expectations of the technology that will be available at university, and the introduction of higher tuition fees could open up a new domestic market as more students consider studying online.
"The higher education sector has been talking about the potential of online learning for well over 10 years. The moment has come if we wish to remain and grow as a major international player in higher education," says Dame Lynne Brindley, chair of the task force and head of the British Library, in the introduction to the report, Collaborate to Compete: Seizing the Opportunity of Online Learning for UK Higher Education.
While online learning costs money to develop, universities can achieve economies of scale and share the financial risk by working in groups, including public-private partnerships, the task force argues.
It recommends that £20 million a year be invested over five years in three to five such consortia selected through a national competition.
A further £5 million a year over five years should be invested in open educational resources, and universities should "pull in the best content...from around the world".
Research commissioned by the task force has shown that students have concerns about the computing competency of their lecturers.
Caroline Gipps, vice-chancellor of the University of Wolverhampton and a member of the task force, said the solution was to develop teams of experts who could help spread online learning across faculties, schools and entire institutions.
"Student surveys tell us that there are marvellous pockets of online learning and then students go to another module and there is nothing. They want a bit more consistency."
Aaron Porter, president of the National Union of Students and another member of the task force, said that, when the tuition fee cap trebles to £9,000 in 2012, studying online "might allow students to save on auxiliary costs like accommodation".
In the US, nearly half of online students live within 50 miles of the main university campus delivering their course.
Other key messages from the task force are that UK online courses need to be far easier to find on the web, and that better market intelligence is required.
Professor Gipps said the task force believed that there was "a huge international market" that was currently "untapped".
So far, with the exception of The Open University, private, for-profit providers have been the most successful, but the task force also highlighted successful public-private models.
"One could take the view that a public-private partnership could be very powerful - the best of both worlds," Professor Gipps said.
The report concludes that online learning "requires significant investment" but also "offers the prospect of significant economic benefits in future years - benefits the UK cannot afford to miss".