The system, which has been reviewed by the federal government, aims to work with local communities to focus on areas of need in the region and offer more places in courses that reflect that need.

The review has been welcomed by Charles Sturt University Vice-Chancellor professor Andrew Vann.

"Allowing universities to allocate places based on market demand means each institution is able to work more collaboratively with its communities to focus on areas of need," he said.

"Charles Sturt University has been able to use the freedom provided by the demand driven system to increase student numbers and access for rural and regional students, as well as metropolitan students studying by distance education.

"It is very encouraging to see the review conclude the demand driven system has not led to a reduction in quality. Instead, it has provided better access for students and encouraged universities to provide innovative courses to meet student and workforce need."

Professor Vann said he shared the review's view that the demand driven system has not affected quality.

"The review notes both the community and potential employers rely on universities to produce a high level of knowledge and skills in graduates."

Professor Vann warned some recommendations in the review would need careful consideration, and any impacts on regional students should be taken into account.

"The recommendations about postgraduate places and the extension of Commonwealth supported places to private providers could have far-reaching implications that need to be worked through," he said.

"And we must be careful to ensure any further changes to the system don't disadvantage rural and regional students, who have typically been less well represented in tertiary education. We know that cost is a greater issue for them than metropolitan students.

"But I think the review's finding the demand driven system has improved student access, created greater responsiveness to student demand, driven innovation and improved quality is a fair assessment and a strong endorsement."