The university rose one place to 33 in the latest Times Higher Education World University Rankings, despite reaching a high of 28 in 2012. Australian National University came in at 45 this year.

Monash University rose from 91 last year to 83. Deakin was ranked in the top 350 while Sydney University moved up 12 places to 60.

Times Higher Education editor Phil Baty said Australian universities had enjoyed a strong year in the rankings. But, he said, Australia was entering a "period of radical reform" as the federal government attempts to deregulate university fees, which would allow universities to set their own course prices.

"The reforms may help a small Australian elite protect or even improve their global standing, but what about the rest?" he said. "Are we going to see a greater polarisation in Australia between a global super-elite and a large number of also-rans declining?"

Melbourne University vice-chancellor Glyn Davis said the latest rankings reflected the institute's "international esteem".

"While rankings are not the only indicator of the success of an institution, they do provide a benchmark to gauge how we are viewed against our international peers," he said.

California Institute of Technology topped the rankings for another year followed by Harvard, Oxford and Stanford universities. US universities accounted for 15 of the top 20. The University of Tokyo is Asia's highest-ranked university, at number 23.

The rankings are based on a range of "performance indicators" ranging from research to teaching environment.

RMIT international education associate professor Christopher Ziguras said opinion was divided in the academic community about the importance of rankings.

"Whether students pay much attention to rankings is hotly contested. I think domestic students don't particularly," he said.

However, he said, international students may rely more on rankings. The international rankings were yet to measure student competence and the quality of education, Professor Ziguras said.

The rankings come after the National Tertiary Education Union released a list of remuneration packages for Australia's university vice-chancellors for 2013. Australian Catholic University vice-chancellor Greg Craven topped the list with $1,095,000. Melbourne University's Glyn Davis was not far behind, receiving $1,055,000.

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