The report highlights economic benefits from research projects in Cardiff, Swansea and Bangor

Welsh universities are "punching above their weight" in research output quality per pound invested, a report claims.

The Learned Society of Wales said it should address "negative perceptions" that Welsh universities are "seriously underperforming" in research.

The Welsh government has called for reforms and mergers of universities.

It also set up a £50m fund last year to improve research to try to encourage top professors to Wales.

The government strategy launched last year said "a sound and vibrant scientific and technological base has substantial potential to boost the economy, through advanced ideas, skills and developments and an effective translation through innovation to more high quality jobs".

Now, a report carried out for the Learned Society of Wales, which promotes higher education achievements, claims in-roads have been made.

It looked at the proportion of the UK's quality-related (QR) funding Wales received against the proportion of highest quality - 3* and 4* - research it produced, as measured in a 2008 research assessment exercise (RAE).

And it showed that Welsh institutions received 4.3% of QR funding in 2007-08, creating 4.45% of 3* and 4* ranked research in the RAE, the best result in the UK.

The report by Prof Robin Williams, former vice-chancellor of Swansea University, said: "It could be argued that in terms of efficiency, Wales leads the UK in terms of output quality...per pound invested - quite an accolade given that the UK is the international leader in the efficiency of research spending."

But he added that more work could still be done, highlighting the Welsh government's new science policy and additional funding from its Sêr Cymru (Stars Wales) programme to help higher education institutions to improve "help science thrive" to boost the economy.

Prof Williams' study also looked at how universities have been "harvesting the fruits" of research for the benefit of the local community and wider economy.

It claimed that in relation to the UK as a whole the Higher Education Business and Community Interaction Survey showed that "Wales punches above its weight in most areas", including research funding, software licences generated and research-related start-up companies surviving more than three years.

And it highlights research and business projects such as Fusion in Cardiff, the Institute of Life Science and the Innovation Campus in Swansea, as well as the new Pontio arts and science project at Bangor University.

The report goes on to say it expects their work will "continue to contribute significantly to economic development".

Universities in Wales are currently facing reforms and mergers, as Education Minister Leighton Andrews says he wants to see fewer, stronger institutions able to compete with universities in other parts of the UK.