It was claimed that British universities were being hit by funding cuts and tight visa controls that were driving bright foreign students and top academics towards other countries.
Phil Baty, editor of the Times Higher rankings, said: Outside the golden triangle of London, Oxford and Cambridge, England s world-class universities face a collapse into global mediocrity.
Huge investment in top research universities across Asia is starting to pay off.
"And while the sun rises in the East, England faces a perfect storm: falling public investment in teaching and research; hostile visa conditions discouraging the world s top academics and students from coming here; and serious uncertainty about where our next generation of scholars will come from, with a policy vacuum surrounding postgraduate study."
The annual tables rank universities based on performance in 13 areas including assessment of teaching quality, research, worldwide influence and international outlook.
According to figures, seven British universities were named among the top 50 - the same as last year.
But just 10 were in the top 100, compared with 12 last year and 14 two years ago.
The number of institutions in the top 200 fell from 32 last year to 31 in 2012. Among those universities retaining their place in the top 200, almost two-thirds fell down the tables.
This included many members of the elite Russell Group.
Bristol fell eight places to 74th, Sheffield was down nine to 110th, Leeds fell nine to 142th, Birmingham fell 10 to 158th, Newcastle fell 34 to 180th and Glasgow fell 37 to 139th.
By contrast, China s two top 200 institutions, Peking and Tsinghua, improved their standing. Universities in Singapore and Korea also climbed the tables.
Wendy Piatt, director general of the Russell Group, said: Our institutions already do more with less, beating many key rivals despite lower expenditure.
"But as these tables show, cuts in public investment have seriously weakened some US public universities. We cannot afford to take this path.
If we are serious about staying on top, the Government must concentrate investment where it will have the most impact: in our world-class research-intensive universities."
David Willetts, Universities Minister, said: "Our university sector has maintained its world-class status but we cannot be complacent.
"In particular, the rankings show the rapid advances being made in East Asia and the Pacific region.
"In future, any country that stands still or moves forward only slowly will find itself slipping down the international league as other countries try harder, invest more and improve their research.
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