Cambridge and Oxford universities were named "super-brands" on Thursday in a new set of world rankings while other UK institutions slipped down the table against competition from Asia.
The two elite institutions were placed third and sixth respectively in the Times Higher Education Supplement's (THES) World Reputation Rankings 2012, which measures universities' prestige among academics.
Harvard University in the US was the highest ranked, followed by Massachusetts Institute of Technology in second place, and Stanford University in fourth, after Cambridge.
The University of California, Berkeley, and Oxford complete the top six, which were all named global "super brands" by the publication.
The UK has 10 universities in the THES list, second only to the US with 44. Last year, Britain had 12 representatives in the top 100, but the University of Sheffield and the London School of Hygiene and Tropical Medicine both exited the top 100 this year.
Other British heavyweights in the list, including Imperial College, University College London, the University of Edinburgh, and the University of Bristol, have all sunk down the rankings.
This is due to an increasingly strong showing from Far Eastern universities, whose emphasis on academic excellence at the expense of other factors means they fare better in 'prestige' surveys than in the regular THES Global Rankings, which uses a greater variety of indicators such as industry income and student diversity.
Only the London School of Economics and Political Science and the University of Manchester bucked the UK trend and went up the ranking.
Tokyo and Kyoto Universities were placed in 10th and 20th places respectively, and China's Tsinghua University rose five places from 35 to 30. Peking University, at 38 this year, made a similar upward trajectory.
The University of Hong Kong entered the top 40 for the first time, and the National University of Singapore also climbed from 27th to 23rd.
Phil Baty, rankings editor at Times Higher Education magazine, said: "Make no mistake, this data should be uncomfortable news for the UK - our global reputation as the home of outstanding universities has been hit.
"Big names have slipped down the league table, and we have lost two institutions from the world top 100 altogether - we are now down to 10 representatives. Meanwhile all the leading Asian universities, most notably in China, are on the up.
"The messages we are sending to the world about our commitment to funding our universities, fuelled by the images of students protesting in Westminster, on top of our clampdown on overseas students, are not playing well globally.
"There is a clear risk that our universities, other than the elite 'super-brands' of Oxford and Cambridge, will be relegated from the premier league of institutions in the eyes of the world, with tangible and sustained damage. Perception is reality and it seems that we are perceived as a fading power."
UCU general secretary, Sally Hunt, said: “The UK continues to punch above its weight on the global stage, but while other countries, particularly in Asia, are investing in their universities our sector is beset by funding uncertainties caused by ill-thought through government policy.
“Our brilliant universities need secure and sustained funding if we are to maintain our proud international position. Higher education is one thing we do well globally, but it cannot be done on the cheap.”