But University of Melbourne vice-chancellor Glyn Davis also wants the government to remain constantly vigilant to ensure that fee-paying foreign students keep flowing in to Australia to cover funding shortfalls.

"That income is what is covering the gap that is not being provided by either the public, or students through fees," Professor Davis said.

"It is the international students coming that keeps the doors open."

Professor Davis said he expected the government's proposed 20 per cent funding cut for university education – championed by former minister Christopher Pyne under Tony Abbott – to also be delayed.

The University of Melbourne was this week ranked the best Australian university in the Times Higher Education world university list – and number 33 internationally – with several other local institutions also well regarded.

Professor Davis said it was gratifying for University of Melbourne to have done well, but also to see other Australian universities were moving up the list.

But he said the value of the international education industry in Australia was not well understood in the community – it was now a larger source of national income than tourism or any non-metal export.

The heavy reliance on fees from foreign students to make up funding gaps left open the question of what would happen for domestic students should international enrolments drop off, he said.

Professor Davis said public funding made up only 23 per cent of his university's budget, and he had reluctantly supported the plans to allow universities to set fees.

"We would rather see better public funding, but as both sides of politics have cut universities in recent years, you'd have to be optimistic to hope for better public funding," he said.

"So we thought a degree of [fee] deregulation was better than just more cuts, which is what we've been living with these past few years."

But he said it would be sensible for the new minister, Simon Birmingham, to go back to a period of consultation and discussion after the Senate twice blocked the previous deregulation plans.

"What he said was not only sensible, he didn't have any choice. If you can't get something through the Senate, you can't start it in 2016. It was a concession to reality," Professor Davis said.

"At least we know where we are … we had been expecting big cuts at the start of next year, and now we know that won't happen."

He said with a breakthrough in the Senate, major higher education reforms appeared unlikely ahead of next year's election.

But he said there were a number of technical matters that could be tackled, including accounting standards in universities,  and collecting debts from graduates working overseas.