Ballot papers on strike action will go out to lecturers in old universities next week after their union rejected a final pay offer of 3.5 per cent.

The Universities and Colleges Employers Association raised its original offer of 3 per cent and said it would advise its members to implement the new increase.

But the Association of University Teachers, which wants pay to rise by 10 per cent, announced it would start balloting for strikes and industrial action short of strikes. An AUT spokesman said: "We rejected 3 per cent because we felt it was derisory and regard 3.5 per cent in much the same light."

He said the union was angered first by the employers' refusal to make up for year-on-year falls in pay and second by their failure to address concerns such as increasing levels of casualisation and pay discrimination against women.

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The UCEA has said it wants to wait before acting on these until it knows what pay machinery is set up as a result of the Bett inquiry.

But the AUT spokesman said: "We feel it could mean a wait of two to three years to deal with issues that should be tackled now."

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Peter Humphreys, chief executive of the UCEA, said employers had considered the affordability of the settlement, the prevailing level of inflation and the range of relevant recommendations by public sector pay review bodies.

"We hope the AUT, on careful reflection, will consider this offer so that a speedy settlement can be reached and implementation of the new pay scales, effective from April 1, can be achieved," he said.

"By doing so, both the employers and the staff side can concentrate on the recommendations of the independent review committee."