Ms May had wanted the Conservatives to include the policy – which would have made universities responsible for ensuring students left the country – in their manifesto for the general election.
The inventor Sir James Dyson criticised the plans this week, saying that they would harm the UK economy.
According to a report in the Financial Times today, senior Conservative officials have said that “the measures will not be included in the Tory manifesto, with Mr Osborne a leading voice in warning that the move would be damaging to the economy”.
“We have a policy that international students can stay when they graduate if they find a graduate-level job paying £24,000 a year,” the newspaper quoted a Tory official as saying.
David Willetts, the former universities and science minister, discussed the developments on the BBC Radio 4’s Today programme this morning.
He said of Ms May’s plan: “I don’t think it was a good idea.
“It was never government policy and I’m pleased that, judging by these press reports today, it’s not going to be Conservative policy at the next election.”
Ms May’s proposal on overseas students, made shortly before Christmas, was widely seen as part of an attempt to position herself for a potential Tory leadership bid by seeking favour from the Right of the party.
Although the plans now appear to have been rejected by Tory colleagues, overseas newspapers had already reported Ms May’s plans. This is likely to have raised fears among UK universities that the perception overseas of the country as a welcoming destination for foreign students has been further damaged by the affair.
“UK to ‘kick out foreign graduates’ to curb immigration,” ran a Times of India headline.
“Come to the UK: Graduate, and then get the hell out!” was the Bangalore Mirror’s take on Ms May’s plans.