Foreign students will be allowed to stay in the UK for two years after graduating, in a policy U-turn on post-visa studies.
International students are currently only permitted to remain in the UK for up to four months after completing their studies under rules that were introduced by Theresa May when she was the Home Secretary.
The new strategy, announced by the Prime Minister, is aimed at boosting the appeal of Britain as a university destination for overseas students.
From 2021, international students who enroll on undergraduate, postgraduate or PhD courses in the UK will be able to stay in the country for two years after they graduate.
Under European Union (EU) laws, tuition fees for British and EU students are capped at £9,250 per year, but there is no limit on what universities can charge international students.
Recruiting international students has become an important revenue stream for universities, with many investing large amounts of money in marketing themselves overseas as well as paying agents to drum up business in target countries.
University chiefs welcomed the move, with Alistair Jarvis, chief executive of Universities UK, saying: “For too long the lack of post-study work opportunities in the UK has put us at a competitive disadvantage in attracting those students,” he said.
We strongly welcome this policy change, which will put us back where we belong as a first choice study destination.”
But Alp Mehmet, chairman of Migration Watch UK, warned that the move is an “unwise and retrograde step”.
He said it will “likely lead to foreign graduates staying on to stack shelves, as happened before", adding: “Our universities are attracting a record number of overseas students so there is no need to devalue a study visa by turning it into a backdoor route for working here."
Boris Johnson's announcement is a reversal of from the reforms introduced by the Home Office in 2012, when Mrs May scrapped the post-study work visa which had allowed non-EU students to stay in the UK and work for up to two years after graduation.
There are currently 460,000 foreign university students in the UK, generating £20 billion per year through education exports - which includes income from international students, English language training and education technology solutions being sold worldwide.
Maths graduates from the UK earn an average of £33,100 five years after they complete their degree, while their peers from outside of Europe earn £48,600, according to the study by the Higher Education Policy Institute.
Meanwhile, Economics graduates earn an average of £37,900 after five years if they are from Britain compared to £45,700 if they are from overseas. In both subjects, students from other European Union (EU) countries earn more than their British classmates but less than those from outside the EU.
Gavin Williamson, the Education Secretary, said: “The important contribution international students make to our country and universities is both cultural and economic.
“Our universities thrive on being open global institutions. Introducing the graduate route ensures our prestigious higher education sector will continue to attract the best talent from around the world to global Britain.”