Thanks Dan for your suggestion. I spoken to another institution whom used SAML for few of their services and works well too. Good idea!
In my scenario as this collaboration involve another institutional, there is a quite complicated process to agree and implement SAML or other SSO. Manual accounts are created to meet the immediate needs at the moment.
We have collaboration with few other institutional via MNet for quite a while and remote enrolment client is an issue now in Moodle 2 (extremely slow and eventually time out in user search!) Hope that the solution to replace MNet will be out soon.