Peers have criticised the Department for Education and Employment for failing to encourage more British students to study abroad.
They say the DFEE has not thought through its international strategy, leaving students struggling to pay for up to a year in foreign climes.
Some believe this failure will hamper Britain's ability to help build a University of Europe, a concept higher education minister Baroness Blackstone signed up to last week.
A report out soon by a House of Lords committee investigating student mobility is expected to suggest that the government could do more to help strike a better balance between the import and export of students. The imbalance has nearly doubled over the past six years, making Britain a net importer of 45,000 European Union students, costing Pounds 100 million a year.
The report is understood to reject a call from Tony Clark, the DFEE's higher education director, for British universities to consider turning away thousands of Europeans to even up the score.
Instead some members of the committee would like to see Britain follow the example of France, where local authorities fund students studying abroad. Although the DFEE has decided to waive a year's fees for students spending a year on an exchange, a large number of students who study abroad for less than a year will not qualify for the waiver.
The report is also expected to criticise the EU, which last week announced a budget of Ecu1,400 million (Pounds 952 million) for the second phase of the Socrates programme that includes an extended Erasmus student exchange. Peers believe the EU should be putting more resources into grants for student mobility to build a more international culture in higher education across Europe.