The British Council, which promotes UK higher education abroad, also warned that the London Met situation “could be hugely damaging to the UK’s excellent reputation overseas”.
About 2,600 of London Met’s existing overseas students must now find places on courses at other universities within 60 days or face deportation, after the UK Border Agency removed the university’s highly trusted sponsor status.
Those due to start at London Met in September have been advised not to travel to the UK.
It is the first time a British university has lost its right to teach non-EU students.
The government’s London Met announcement came as figures from the Office for National Statistics showed 75,000 fewer student visa were granted in year up to June – around 283,000 in total – a drop of 21 per cent on the previous 12 months.
The coalition government has committed to reducing net migration to the tens of thousands – carrying through on a Conservative manifesto pledge – and international students at various levels of the education system have become a focus.
The London Met ban has attracted international media attention, with several TV news stations leading with the story. It was also the top trending story on the social media site Twitter for several hours.
Dozens of students have held a protest outside Downing Street in response.
University leaders have now spoken out against the ban, saying it could put off international students from applying to UK institutions.
Sir Christopher Snowden, vice-chancellor of the University of Surrey and vice-president of Universities UK, said: “The London Met situation is very serious, not only for that university, but for the whole UK sector as it could send a very negative message overseas.
“This situation could be interpreted very adversely by international students, their sponsoring organisations and future potential students considering study in the UK.
“UK universities contribute over £8 billion to the UK economy through their education of international students and this type of incident certainly threatens that important contribution to the economy.
“UK universities will want to re-assure their current and prospective international students that they have taken steps to ensure that they comply with UKBA requirements and that they retain their highly trusted sponsor status.”
With just weeks to go until the start of the academic year, placing existing students at other universities may also prove highly difficult, Sir Christopher added.
“This may prove very challenging in the time available and for a variety of reasons many other universities may not be in a position to offer displaced students level 2 and level 3 places on their courses,” he said.
Colin Riordan, the incoming vice-chancellor at Cardiff University, who is chair of the UK Higher Education International Unit at Universities UK, also condemned the disruption caused to students.
“The blunt instrument of revoking the sponsorship status of a whole institution in this way will mean that many entirely legitimate students who have complied with all academic and visa requirements will have their studies and indeed their everyday life very seriously disrupted,” he said.
“Other UK universities will pull together and will support these students in any way they can, but the answer must be for the government to carry out an urgent review of its policy on student visas and recognise that all universities in the UK need to be free to teach students who are academically qualified wherever they come from.
“Above all, the government must recognise that students are not migrants; they come to the UK for a defined period in order to acquire an excellent education and then they return to their home country.”
Martin Davidson, chief executive of the British Council, said: “This situation at London Met could be hugely damaging to the UK’s excellent reputation overseas.
“Our offices around the world are receiving a high level of concern and we are doing our best to explain the position and reassure students that the UK welcomes and values them.
“We are making clear that this will not affect people with places in the UK’s other universities.”
Malcolm Gillies, vice-chancellor of London Met, has said the university will challenge the ban, which immigration minister Damian Green said was triggered by “a serious, systemic failure” in the university’s monitoring procedures.
But Professor Gillies said there was not sufficient evidence to merit the action.
“I would go so far as to say that the UK Border Agency has been rewriting its own guidelines on this issue and this is something which should cause concern to all universities in the UK,” he told Sky News.
Unions at London Met will hold an emergency meeting on Monday to discuss the issue.
Max Watson, branch chair of Unison, also said the drive to outsource non-academic services meant visa compliance had not been a high priority.
The licence revocation was “unfair, aggressive and disproportionate, but it was predictable as Hurricane Isaac,” he said.
“Instead of dealing with systemic problems, the university took its eye off the ball and focused on privatising the university.”