Education Cabinet Secretary Fred Matiang'i has directed the higher education regulator to audit all universities operating with letters of interim mandates to establish their suitability.
Dr Matiang'i on Monday said universities that will be found to have breached the law will be shut with immediate effect.
"We cannot have universities with letters of interim (mandates) operating yet they cannot pay their staff or get charters as stipulated in the law," he said.
"If they are not ready they should surrender the certificates."
Dr Matiang'I, who was speaking during the 31st Amref Health Africa graduation in Nairobi, asked universities to prepare for a major shake-up, insisting that it will not be business as usual.
"We want to only have universities... whose focus is quality education," said the CS who also asked university councils to be courageous enough and recall degrees awarded to Kenyans irregularly, especially politicians.
He awarded the institution a letter of interim authority, which means it will now offer degree programmes.