America's Harvard University has retained its top position in 2009 while UK's Cambridge University has moved up from third to second position. Yale University of US has slipped one position to third.
According to the QS/Times Higher Education rankings, the University College London (UCL) leapfrogged Oxford University as the latter slipped from fourth to joint fifth position along with Imperial College, London.
Overall, the UK still punches above its weight, second only to the US, the report said. It has four out of the top 10 slots and 18 in the top 100.
The number of Asian universities in the list of top 100 has increased from 14 to 16. The University of Tokyo, at 22, is the highest ranked Asian university, ahead of the University of Hong Kong that stands at 24.
Leading UK universities said institutions in Japan, South Korea and Hong Kong were "snapping at the heels" of western institutions, arguing they need more funding to compete on the global stage.
However, there has been a significant fall in the number of North American universities in the top 100, from 42 in 2008 to 36 this year.
The rankings are based on an international survey of 9,000 academics that assessed the institutions' research facility, teaching quality and ability to recruit staff and students abroad.
"The broad message of these tables is clear - the leading UK research universities are held in high esteem internationally but countries like China and Korea, which are investing massively in their best institutions, are snapping at our heels" Wendy Piatt, director general of the Russell Group of universities said.
Piatt said the UK was less well-funded than its competitors and if public spending cuts hit budgets they would be under increasing pressure.
Universities are currently arguing for improved funding in a forthcoming review of the student finance system, to be launched by the government within weeks. They are calling for fees to be increased to safeguard the quality of teaching.
The top 10 universities are: Harvard (US), Cambridge (UK), Yale (US), UCL, London (UK), Imperial College, London and Oxford (both UK, joint 5), Chicago (US), Princeton (US), MIT, Massachusetts (US) and California Institute of Technology (US).