The University of Melbourne was again crowned Australia's top performer in the Times Higher Education world university rankings, finishing at number 33, the same position as last year.

The Australian National University in Canberra followed at 52, and the University of Sydney came in at 56.

Monash was the second best performing Victorian university, climbing from 83 to 73.

Despite concerns about dwindling funding for university research, Australia lifted its performance in the rankings, with 22 universities in the top 400.

Other Victorian universities that made the coveted list include Deakin University, which finished in the 301-350 group, La Trobe University (351-400), Swinburne University of Technology (351-400) and RMIT (401-500).

University of Melbourne Vice-Chancellor, Professor Glyn Davis, said the rankings "recognised the university as one of the world's best when it comes to research".

"The essence of a university is its mission to both develop and share knowledge. As Vice-Chancellor, I am pleased we can, as an institution, lay claim to a ranking that reflects how importantly we take this mission."

Last week the university launched a new campaign to raise the profile of its research.

Monash University President and Vice-Chancellor Professor Margaret Gardner said the university had improved by 44 places since 2011.

"This achievement is a significant milestone for the university as we continue to strengthen our performance internationally," she said.

The rankings are based on 13 performance indicators including industry income, teaching, research influence and international outlook. They were released on Thursday as the Turnbull government announced it would axe its plan to let universities set their own fees from next year.

Phil Baty, editor of the rankings, said that without a funding increase, it would be difficult for Australian universities to maintain this performance.

"In terms of the big research powerhouses of the region, places like Singapore and China are investing very, very heavily in universities. Their public spending on research is growing while Australia is heading in the wrong direction."

Competition for international students is also intensifying.

Mr Baty said Germany had poured "billions of Euros" into its top universities and was now teaching classes in English to appeal to international students.

Melbourne University Student Alex Jeffares who studies Political Science and Arabic, questions the criteria used in the rankings. He believes the university has major problems with class sizes.

"The teacher to student ratio does not warrant number one ranking in this country" he said.

He also said that the model the university is following may have influenced the rankings.

"The model that this university is trying to engender is an American model and perhaps they have favoured the Melbourne model because it's more Americanised and they have seen it as more compatible with the criteria."

Ahamad Siddiqi, who studies a diploma of French, said the facilities and management of studies is well structured but questions the criteria of the rankings.

"I wouldn't call Melbourne Uni number one in terms of academics or in terms of how it treats its students. It doesn't do too much in terms of aiding student experience".