Oxford held on to first place in the latest annual Times Higher Education World University Rankings, with Cambridge rising from fourth place to take second.
It is the first time that the two prestigious institutions have taken the top two spots in the 13-year history of the rankings.
Out of 31 UK universities to make the top 200, 16 have seen a fall in their position, compared to last year.
These include York and Leeds, which fell by eight and six places respectively but are both still among the top 150 universities worldwide. The University of Sheffield, Yorkshire’s highest-placed university, rose by five places from 109th to 104th.
Phil Baty, editorial director of the THE global rankings, said UK higher education is facing “intense political pressure”, but that the data shows that the nation has “many of the very best universities in the world”.
Overall, the rankings show Oxford in first place, followed by Cambridge and then the California Institute of Technology (Caltech), which drops one place to joint third with Stanford University, also in the United States.
Rounding out the top five is another US institution, the Massachusetts Institute of Technology (MIT).
Rankings authors said that results at the top were “extremely tight”, with all top-ranked universities performing well against the 13 factors used to measure performance, but that one reason for Oxbridge’s success is that both have seen significant increases in their total institutional income this year.
Mr Baty said: “The UK higher education system is facing intense political pressure, with questions over the value for money provided by £9,250 tuition fees in England, our continued attractiveness to international students, the flow of research funding and academic talent post-Brexit, and even levels of vice-chancellors’ pay.
“But one thing this new data makes absolutely clear is that the UK has many of the very best universities in the world and it has one of the world’s strongest higher education systems.
“The data shows UK universities are consistently producing ground-breaking new research which is driving innovation, they are attracting international students and academic talent and are providing a world-class teaching environment.
“They are a huge national asset, and one that the country can ill afford to undermine at a time when its place in the global order is under intense scrutiny.”
Professor Sir Keith Burnett, Vice-Chancellor of the University of Sheffield, said the rankings confirmed its place “as a leading global university with a world-class reputation for research, combined with excellent teaching and learning and an outstanding student experience.”
He said: “Over recent years we have put a significant emphasis on international partnerships and a global community of talent, and it is especially pleasing to see this outlook acknowledged in what is a globally competitive...environment. The news also recognises our academic strengths and expertise across all faculties, which make a real difference in people’s lives.”