The university also admitted it had "delivered executive education programmes to Libyan officials", but said it had now decided to sever all those links "in view of the highly distressing news" about hundreds of protesters killed by armed forces.

"The school intends to continue its work on democratisation in north Africa funded from other sources unrelated to the Libyan authorities," it said in a statement published on its website.

Seen as one of the 'reformists' in the Gaddafi clan, Saif al Islam had spent four years at the LSE researching his PhD entitled "The Role of Civil Society in the Democratisation of Global Governance Institutions: From Soft Power to Collective Decision Making?"

But in a speech broadcast on Sunday on public television, the LSE graduate threatened demonstrators with "rivers of blood" and called them Western agents and drug addicts, warning about civil war, an Islamist take-over and the splitting of the country into a petro-rich east and a poor west.

One of his LSE mentors, David Held, a professor of political science, on Monday also dissociated himself from his former student.

"My support for Saif al Islam Gaddafi was always conditional on him resolving the dilemma that he faced in a progressive and democratic direction. The speech last night makes it abundantly clear that his commitment to transforming his country has been overwhelmed by the crisis he finds himself in. He tragically, but fatefully, made the wrong judgement," the professor said in an emailed statement

Meanwhile, a report published Tuesday by the European University Association stresses the need for maintaining public funding for the bloc's 5,000-or-so universities.

The study reveals that "additional funding sources cannot replace sufficient public funding", as the latter accounts on average for 73 percent of the university budget.

"Philanthropic funding" of the type LSE received in the Gaddafi case accounts on average for about 4.5 percent of the total university funding, while tuition fees, business contracts and international grants can make up for the rest of the budget.

Among the 150 universities surveyed over the past two years, more than half expected public funding to fall, while only 30 percent believed it will remain stable. Almost half of the respondents said non-public funding was likely to increase.

LSE itself last year was playing with the idea of going completely private and thus being able to generate more income from higher tuition fees.

In the Netherlands, shrinking university budgets and pressure to find alternative sources of income has seen Dutch professors and students take to the streets in January. The new government has proposed changes which would see students in the Netherlands take longer to graduate potentially paying an extra €3,000 per year in fees.

More to the east, university professors in Romania are baffled by a snap decision of their government to send into retirement hundreds of them the moment they meet the pension age, without being able to finish their classes and close the academic year.

The government decree "was written hastily, without consulting social partners and will cause chaos in the current academic year," an open letter by the university trade union Alma Mater from 14 February reads.