Within two years, virtually all specialist degrees will be replaced by the 'new generation' undergraduate programmes in arts, science, commerce, environment, music and bioscience. The first graduate schools - in law, architecture, nursing and education - will be set up over the following five years with other schools in medicine, veterinary science, journalism, criminology, dentistry and physiotherapy expected to follow.

The 'Melbourne model', approved last month by Julie Bishop, Australia's Minister for Education, Science and Training, is a major departure from the country's tradition of undergraduate specialisation that will require students seeking professional qualifications to study for a minimum of five or six years.

While retaining the three-year degree that is the norm across Australia, the shake-up will bring Melbourne more closely into line with higher education in the United States, where students take four-year degrees, involving two years of general courses plus two years focusing on a major subject and study for most professions, including medicine and law, is at graduate level.

Melbourne's shake-up also anticipates changes in Europe where a similar graduate school model has been adopted by the European Union through the Bologna Declaration as the pattern universities across the continent are expected to switch to from 2010 onwards.

Vice-chancellor Professor Glyn Davis, who was in Hong Kong recently, said: 'We are doing this because it is the future of higher education. There has been a huge explosion of knowledge and it takes longer to teach a subject than used to be the case.

'We are convinced that three years of generalist education is a good thing because it develops certain competencies in, say, arts, science or commerce, before students make a professional commitment.

'The higher degree is focused on developing graduate attributes such as analytical skills that our students will use in their professional careers. I think a number of leading universities across Australia will adopt some version of this model but not all. It is good for Australia to have more diversity.'

Professor Davis said a team of academics was revising the curriculum of every programme offered in tandem with preparations for the new structure, to ensure students could take a logical sequence of courses.

All students would be expected to take a major subject within one of the six areas, plus a structured programme of other courses, including at least 25 per cent taken from another area. Joint honours and combinations of major and minor subjects would remain possible.

'Currently, if you want to be a lawyer in Australia, it is likely that you would be doing a combined arts and law degree,' he said. 'You do both at the same time and it will take you typically five years. In the future, you will do a three-year arts degree and then you will do a six-semester law course leading to a Juris Doctor.'

The plan, which was agreed by the university's governing council in February, is expected to cost in the region of A$50 million ($291 million) to A$100 million and take 15 years to complete - ending in 2023. The cost will be recouped by raising the percentage of full-cost places for private students from current levels of between 20 per cent and 27 per cent up to about 35 per cent.

All students seeking a professional qualification will face the increased costs of the extra years of study involved in the two-stage degree process. These will follow recent increases in Australia's basic university tuition fee - the HECS - combined with the introduction of top-up fees, which Melbourne has introduced at the highest level, amounting to 25 per cent of HECS.

The number of scholarships will also be increased, drawing on Melbourne's endowment of A$1.2 billion - the largest of any university in Australia. But the university that emerges at the end of the process is expected to be a smaller one than it is today, with the emphasis on quality rather than quantity.

Professor Davis said he was confident that Melbourne would be able to maintain both its popularity and open access to students of all backgrounds after the changes.

'I don't think it's risky at all,' he said. 'Firstly, we offer the most generous scholarship scheme in Australia, so against the fact that there are more private students, we are also providing more opportunities for scholarships. Not every student will go on to professional school.

'We are trying to see about 30 per cent to 35 per cent of our students entering graduate schools. And we argue that our new system will actually widen access despite the large number of private students because it is a two-tier process. Some students who would not have got in as undergraduates will come in as graduates.'

Professor Davis said that Melbourne - ranked 19th among world universities in a league table published by the Times Higher Education Supplement - aimed to retain its place at the top through the changes.

'We are facing stiff competition particularly from the major Asian giants such as Fudan, Tsinghua, Peking and Tokyo - and this is the company that we want to be in.

'The model being designed in Hong Kong is a variation of the same solution, which is to provide a generalist degree before professional specialisation. Our model will be up and running some years before Hong Kong makes its change and it will be very useful to make some comparisons.'

Professor Davis said he would welcome senior academics from Hong Kong to come and study the Melbourne model in practice.

He also stressed that the new Melbourne degrees would involve no additional cost for foreign students - with fees broadly comparable to current levels - and would provide a more flexible range of options for students seeking study in Australia in the future. The university currently had 656 students from Hong Kong and 2,194 from the mainland.

'At the moment these students are overwhelmingly undergraduate,' he said. 'But over time we expect to see the balance shift so that more will be graduate students.'