The Collaborative International Dictionary of English v.0.48:

Varsity \Var"si*ty\, n.
   1. Colloquial contraction of University. [Brit.]
      [Webster 1913 Suppl.]

   2. the team with the best players of a school or club, being
      the main representative of the organization in competitive
      play between schools or organizations. In schools,
      contrasted with junior varsity. Also used attributively,
      as, the varsity football team.
      [PJC]

WordNet (r) 3.0 (2006):

varsity
    n 1: a British abbreviation of `university'; usually refers to
         Oxford University or Cambridge University
    2: a team representing a college or university [syn: varsity,
       first team]

Moby Thesaurus II by Grady Ward, 1.0:

43 Moby Thesaurus words for "varsity":
   academe, academia, alma mater, cast, college,
   college of engineering, community college, company, complement,
   crew, degree-granting institution, eight, eleven, first string,
   first team, five, four-year college, graduate school,
   institute of technology, ivied halls, journalism school,
   junior college, law school, medical school, multiversity, nine,
   normal, normal school, platoon, postgraduate school, reserves,
   rowing crew, school of communications, school of education,
   second string, second team, squad, string, team, third string,
   two-year college, university, university college