A partnership of UK universities is launching an online project, challenging US universities that have dominated this emerging market.
They will aim to give the public access to higher education courses via computers, tablets or smartphones.
The partnership will include the Open University, King's College London, Bristol, Exeter, Warwick, East Anglia, Leeds, Lancaster, Southampton, Cardiff, Birmingham and St Andrews.
Courses will be offered from next year.
This could "revolutionise conventional models of formal education", says Universities Minister David Willetts.
The project will represent the biggest UK response to rapidly growing online universities - with these universities planning to offer courses through a shared online platform.
There are usually no formal entry requirements for students on such courses but individual universities will have to decide how students can be examined and accredited.
Martin Bean, the Open University's vice-chancellor, said that the arrival of online courses meant that UK universities could either "stick their heads in the sand" or rise to the international challenge.
The vice-chancellor said higher education had to face up to the impact of the internet on delivering courses.
"What the web has taught us is that you can take nothing for granted - those who sit back and hope it goes away will lose," he said.
University of Southampton vice-chancellor Don Nutbeam said joining this project would help to build the university as a "global brand".
He anticipates that his university will offer about 15 to 20 self-contained modules, which could be the "stepping stones" for students to enter other courses.
"We want to be in at the foundation - we want to be well positioned," he said.
A new company called FutureLearn is being set up to run this online project, which will be majority-owned by the Open University.
This year has seen intense interest among universities in the United States over the growth of online university platforms.
These have become known as Massive Open Online Courses - or MOOCs.
Online joint projects, offered by some of the world's leading universities, including Harvard, Stanford and MIT, have attracted registrations from millions of students.
They have raised the prospect of reaching many more students at a much lower cost. Their courses have used the internet to deliver video and provide interactive exercises and automated testing.
The announcement from the FutureLearn project sees the first major challenge from the UK, headed by the Open University, which has pioneered distance learning.
This comes a day after the UK's universities admissions service reported a 54,000 drop in students starting courses this autumn, in the first year of higher tuition fees in England.
From next year, the universities involved in the UK project will begin to offer courses on the FutureLearn online platform.
These universities will be responsible for the content, quality, accreditation and cost of courses offered online.
There will also be social networking-style communities for students.
Materials will be designed for portable devices, such as iPads or mobile phones.
In the US, in these early stages of development, courses have been offered free - but there have been charges introduced where there are certificates and invigilated exams.
There are also expectations that high levels of web traffic will be used for advertising or links to other services.
"The big frontier" for online universities, says Mr Bean, is how to test and award credits for such large numbers of students.
And when universities are charging high levels of tuition fees for their campus-based students, this raises questions about how this will be balanced against awarding online degrees for much less.
But Prof Nutbeam says that the impact of online courses could change the expectations of students on campus. Will students still want to sit through traditional lectures rather than using recordings?
"The UK must be at the forefront of developments in educational technology. Massive Open Online Courses present an opportunity for us to widen access to, and meet the global demand for, higher education. This is growing rapidly in emerging economies like Brazil, India and China," said Mr Willetts.
"New online delivery tools will also create incredible opportunities for UK entrepreneurs to reach world markets."