MELBOURNE, Aug 8  - In Melbourne police watched on as about 200 university students and staff met outside the city's state library on Tuesday before marching down Swanston Street for a sit in.

The group chanted "no cuts, no fees, no corporate universities" and held up "education is a right, not a privilege" banners and placards as part of the hour-long National Tertiary Education Union demonstration.

The union had called for Australia-wide protests on university campuses in addition to planned National Union of Students rallies in cities centres.

"If the government's higher education reform package passes the Senate, there will be an immediate detrimental impact on staff and students through job losses, bigger class sizes, less course choice, more support services cut and even more employment insecurity," NTEU president Jeannie Rea said.

"We are meeting on campuses because we also have a message for our university managements.

"Hard-working staff have had enough of being treated as a soft target every time there are calls for 'belt tightening' or 'budget repair'."

The Turnbull government wants to impose a 2.5 per cent "efficiency dividend" on universities in 2018 and 2019.

It also plans to increase student fees by up to $3600 over a four-year degree and link a portion of university funding to performance and transparency measures.

Under this plan, the government argues real per-student funding will be $18,958 in 2018 compared with $17,623 in 2009, when all universities had surpluses, or $18,024 in 2011, when all but Central Queensland University did.