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The comments were part of a letter from vice-chancellor Prof Harlene Hayne opposing the renewal of Cumberland St Super Liquor's licence, which is next to a service station in North Dunedin.
The renewal is also being opposed by police and the Southern District Health Board, who say a recent ruling made it clear liquor stores were not allowed to be next to service stations.
Prof Hayne's letter goes much further than opposing the single licence renewal and calls on the Dunedin district licensing committee to do ''all in its power'' to address the proliferation of liquor stores in and around the student quarter.
''The unacceptable proliferation of liquor outlets in North Dunedin and the ready availability of cheap alcohol is at the heart of this problem.''
The proximity of the Cumberland St Super Liquor to a nearby one on Malcolm St was a ''glaring example of this proliferation''.
Prof Hayne pointed to international research which showed increased alcohol availability was associated with higher rates of dangerous drinking.
''We also observe that the proliferation of off-licence outlets often fuels competition on price and other promotions; these practices are particularly evident during Orientation Week and other prominent events on the student calendar.''
Every year events were held in the campus area that involved large groups of students and young people drinking to excess, in an environment with a ''high tolerance for gross intoxication''.
She also emphasised the efforts the university took to combat dangerous drinking and the effect it had on its students and the university's reputation when things went wrong.
''We continue to put considerable time, effort and money (an estimated $2.4 million in 2014) into helping our young people deal with the drinking culture that permeates New Zealand, but it often feels like we are bailing out the Titanic with a thimble,'' she said.
In response to questions from the Otago Daily Times, Prof Hayne said that $2.4million included the money it spent on Campus Watch, the cost of alcohol counselling provided by student health and staff time across the campus, including in the vice-chancellor's and proctor's offices.
The university had opposed other liquor licences in North Dunedin, including Liquorland in Leith St in April this year.
'''The university does not support prohibition, but at the same time we recognise that the density of liquor outlets is a key driver of alcohol consumption by young people.
''From this perspective, less is more.''
Police shared some of Prof Hayne's concerns, with alcohol harm reduction officer Sergeant Ian Paulin saying nearby Castle St was ''one of the worst'' areas in Dunedin for alcohol-related callouts.
''Whilst police have no statistics that directly correlate alcohol harm back to this premises, it is almost certain alcohol purchased at this premises results in nearby harm,'' Sgt Paulin said in his report opposing the licence.
A hearing is being held next week.