Instead, Fudan University will likely punish such students with warnings or negative reports in their student records, according to a report Monday on the official China Daily newspaper's Web site.
An article about the changes posted on Fudan's campus Internet bulletin board said warnings would be given for premarital sex. Engaging in prostitution or visiting prostitutes would result in expulsion, it said.
The China Daily report said school officials have declined to comment. Calls to the university's student administration office rang unanswered on Monday.
The changes were prompted by Education Ministry reforms, issued in March, that aim to eliminate random punishments and rules that conflict with the law or constitution. The new rules take effect in September,
Fudan University's rule change is viewed as likely to set a precedent for other campuses in China.
The expulsion-for-sex rule has stirred much controversy and debate in China's usually tightly controlled state media -- and widespread disdain among students.
All Chinese universities are believed to have such a rule, but it isn't clear how strictly it is upheld.
"If this rule was to really be enforced, you'd have to expel 60 percent of the Fudan student body," wrote one posting on the university Internet bulletin board, signed "Yidaidusheng."
Polls show growing acceptance of premarital sex among young Chinese, but campuses remain highly structured and patriarchal, with strict rules governing student life.
Peking University -- one of China's most respected - last year called off plans to hand out free condoms for World AIDS Day, reportedly because administrators feared that would encourage student sex.