The news comes days after the government confirmed that it would continue to include students in the way it counts net migration—which it is committed to lowering—despite mounting criticism that the policy is undermining education exports.

According to its latest quarterly statistics, the Office of National Statistics revealed that net migration to Britain – the number coming to the country for more than a year minus those leaving – fell to 163,000 in the 12 months to June 2012.

“The US, Canada and Australia all treat international students as temporary migrants for domestic policy development”

This is 84,000 below the 247,000 recorded in the same period in 2011. It closely corresponds with a decline in overseas students, which fell from 239,000 to 197,000 in the same timeframe.

The ONS also cites new Home Office data that reveals that overall, 20% fewer study permits were issued in the year to December 2012, with South Asian countries worst affected. 69 per cent fewer visas were issued to Pakistanis, 50 per cent to Indians, 72 per cent to Sri Lankans and 53 per cent to Bangladeshis.

Responding to a report by the BIS Select Committee this week, the government said it would continue to include international students in net migration figures. The report had called for students to be “recorded under a separate classification and not be counted against the overall limit on net migration” for the purposes of policy development.

Commenting today, the select committee said the government’s response had been “woefully short on detail” and failed “to take account of recent developments”.

It questioned whether the government was “fudging the facts” by saying the UK’s competitors included students in their net migration figures—suggesting the US, Canada and Australia all did so.

69 per cent fewer visas were issued to Pakistanis, 50 per cent to Indians

It also disputed the government’s claims that its tougher visa policies are not affecting higher education, citing Universities UK data that show a slight fall last year.

The ONS data also highlights the damage to other sectors. English schools and further education saw visa applications fall by 69% and 62% respectively in the year to December 2012.

The committee said: “The Government’s response contains a number of assertions which we believe are open to challenge.”

It added: “Five parliamentary committees have considered this issue and last month the Chairs of those Committees…wrote to the Prime Minister urging the change of policy.

“The government response should have taken that collective view into account. It is clear that it did not.”