British universities are losing a bitter battle against severe government cutbacks in funding for higher education, which will bring to an abrupt end an era of dramatic expansion for Britain's universities, colleges and polytechnic schools.

In a nation where the autonomy of its famous universities has seldom been challenged, the real world has come knocking at the door of the ivory tower. If current policies of Prime Minister Margaret Thatcher's government are carried out, as they appear likely to be, the universities will suffer an average drop of 15 percent in their funding over the next three years and be forced to trim student populations by about 5 percent.

In Britain, unlike the United States, all but a handful of higher-education institutions rely on government money for everything but a tiny slice of their income. Although some may emerge relatively unhurt from the current crunch, others face full-scale restructuring and cuts of courses and staff, or the prospect of bankruptcy.

As scattered student protests and lobbying of Parliament have demonstrated, the cuts have drawn strong complaints.

Speaking at a rally of British university dons in London recently, opposition Labor Party leader Michael Foot dismissed the cuts as "short-sighted, irresponsible and barbaric." In a parliamentary debate, even members of Thatcher's Conservative Party asked pointed questions about the logic and speed of the cuts.

"When the resources applied to all public programs have to be limited," answered William Waldegrave, Thatcher's minister for higher education, "even the most valuable cannot be wholly protected."

Since the early 1960s, when the British government adopted the so-called Robbins Principle, guaranteeing higher education to all those qualified and willing to pursue it, Britain's separate university and polytechnic and college sector of higher education have grown rapidly. Nearly 300,000 students are currently studying in the nation's 45 universities, a threefold increase in less than 20 years. Many come from middle-class families who voted for Thatcher's Conservatives.

Now, in the worst cases, the universities of Aston, Salford, Surrey and Bradford will lose between 30 and 40 percent of their funding and have already eliminated some programs. Elsewhere, reserve funds are drying up. Education Secretary Sir Keith Joseph has warned that he would prefer deliberate closures to "random bankruptcies."

Even the most privileged institutions, Oxford and Cambridge, must consolidate. At Oxford, where about $1.2 million must be saved this year, teaching in agriculture and forestry sciences will end, and the hours of opening for certain facilities may be cut.

The government's critics argue that the rollback comes at a time when Britain's pool of 18-year-olds eligible for higher education is heading for a historic high in 1983, when applications to universities are on the rise and when newspapers daily run stories about unemployed and undereducated young people.

Already, fewer 18-year-olds enter institutions of higher education in Britain than in almost any other industrialized country. Britain's 18 percent is far below the 55 percent in the United States and about 10 percentage points below France and West Germany.

About 20,000 places in higher education will be lost in the next three years. Only 60 percent of those seeking higher education will be able to secure it, instead of the current 75 percent.

In a country with a depressed economy, the cuts may prove self-defeating, warn critics sporting buttons reading, "If you think education is expensive, try ignorance." "If there is an upturn in the economy," Christopher Price, the Labor member of Parliament who chairs its Select Committee on Education and Science, predicts, "Britain will be singularly unprepared for it."

"You can't run a modern economy on an ignorant people," contends Tyrrell Burgess, a London Polytechnic lecturer. "Britain seems to be more or less unique in trying to do so."

Many critics trace current university woes back to the first days of the Thatcher government, when the Education Ministry, despite strong opposition, eliminated subsidies for overseas students. Foreigners can now pay in excess of $10,000 for courses that British students receive for less than $2,000.

In prior years, increasing the number of overseas students had proved a valuable way to increase revenues. But applications from foreign students have dropped 60 percent since 1979.

At the London School of Economics, which is slated to lose almost one-third of its grant by 1983-84, Director Ralf Dahrendorf has launched a campaign to recruit U.S. students, which includes slick brochures advertising the attractions of living in London.

The "soak-the-foreigners" approach also has caused friction between Britain and Commonwealth countries, which have traditionally sent many students here.

Because salaries comprise at least 70 percent of any British university's expenditure, an obvious solution to their financial plight is the dismissal of academic staff. Whereas in the United States and elsewhere, cuts might be achieved by dismissing nontenured personnel, there is no similar group in Britain. Dismissal notices for some tenured staff members are expected soon. Eventually, as many as 5,000 of Britain's 42,000 dons may be laid off.

Dismissals on such a large scale would require some sort of compensation, which a committee of vice chancellors calculates could cost $400 million. Dismissals would also raise other difficult questions. Moves to sack tenured staff almost certainly will bring a barrage of lawsuits.

Other solutions being explored by universities include mergers of independent colleges into more cost-efficient units. Consolidation of academic programs--where Chinese or computer-science departments at a number of institutions would be unified and relocated--also is being considered.