The report has prompted the Lords to call for a “simpler” immigration policy that excludes overseas students from net migration figures and the reinstatement of the post-study work (PSW) visa.

“The view within government that current policies are working well is disconnected from the concerns we repeatedly heard”

The number of international student entrants studying STEM subjects at higher education level fell by around 10% from 58,815 in 2010/2011 to 52,905 in 2012/2013.

Lord Krebs, who chaired the committee, said that the “overwhelming evidence” indicates that immigration rules have played a direct role in deterring international students.

“The rules are seen as too complex and subject to endless changes, the visa costs are not competitive, and the rules relating to work after study are so limiting that prospective students are heading to the US, Australia, Canada and elsewhere,” he said.

The report, released today, calls the coalition government’s policies of increasing the number of international students by 15-20% over the six year period to 2019 while simultaneously reducing net migration overall “contradictory” and recommends excluding students from immigration figures.

“The government maintain that they emphatically welcome international students; unfortunately, elements of policy and perception are working against this admirable aim,” it argues. “The view within government that current policies are working well is disconnected from the concerns we repeatedly heard.”

The report also calls for the reinstatement of the PSW visa, abolished in 2012, allowing international graduates to stay and look for work for two years after completing their studies.

Current regulations allow students only four months to search for work before they must return home, which Krebs called “more or less tantamount to telling overseas students they’d be better off going to study elsewhere”.

The report also highlights the economic value international students bring to UK universities – which UUK figures put at 20% of all university revenue  – saying a fall in international students poses a “real threat” to the sustainability of some university courses, particularly taught Masters, which are made viable by international student fee income.

“The UK cannot afford a brain drain of the world’s most ambitious young people”

Dr Jo Beall, British Council Director of Education and Society, says she supports the committee’s recommendations to reclassify students in immigration data.

“Any drop in students must be investigated as the UK cannot afford a brain drain of the world’s most ambitious young people,” she said. “For the UK to remain globally competitive, the focus must be on attracting and supporting international students.”