Details of how students will be compensated for financial losses stemming from the decision to revoke the university's licence to sponsor students have been announced by the taskforce led by the Higher Education Funding Council for England.
Most of London Met's 2,600 non-EU students will now be unaffected by the visa ban after a High Court decision on 21 September meant international students could remain at the university until the end of the 2012-13 academic year.
However, more than 500 students have more than a year left to complete their studies, Hefce has revealed.
They will have the option of staying on at the university for the current academic year, but could transfer to another institution if London Met fails to regain its highly trusted status with the UK Border Agency.
The taskforce has now pledged to meet additional expenses incurred by these students as they switch courses.
It will make up the difference if a new institution's fees are higher than those at London Met, while students forced to move house will have costs such as rent deposits refunded by the government.
Those remaining in existing accommodation, but attending a new university, will be reimbursed the difference if their travel costs are higher.
A clearing house to help students find a new course - similar to the one currently running - will also be set up next summer to help relocate students if London Met fails in its bid to overturn the UKBA ban.
The £2 million hardship fund will also assist those who have already moved university in the wake of the UKBA decision.
The current clearing house to relocate students will remain in operation until 12 October, despite the temporary reprieve granted by the court decision.
Sir Alan Langlands, chief executive of Hefce and chair of the taskforce charged with helping London Met students, said: "The fund established by the universities minister will help to meet the costs of students affected by the revocation who choose to move to another institution.
"We hope that it will also help to restore the confidence of international students, their families and communities in the UK as a place that welcomes international students, and values their contribution to the high standards of teaching and research in our universities and colleges.
"I visited the university last Friday morning and was impressed not only by the maturity of the students, but by the dedication and professionalism of staff at the university who developed and implemented the clearing house at short notice, and who are providing counselling, advice and guidance for the students."