Australia will introduce a cap on the number of new international students it accepts, as it tries to reduce overall migration to pre-pandemic levels.

The nation has one of the biggest international student markets in the world, but the number of new enrolments will be limited to 270,000 for 2025.

Each higher education institution will be given an individual restriction, the government announced on Tuesday, with the biggest cuts to be borne by vocational education and training providers.

The change has angered the tertiary education industry, with some universities calling it “economic vandalism”, but Canberra says it will improve the quality and longevity of the sector.

Enrolments at public universities will be pared back to 145,000 in 2025, which is around their 2023 levels, Mr Clare said.

Private universities and non-university higher education providers will be able to enrol 30,000 new international students, while vocational education and training institutions will be limited to 95,000.

The policy would also include incentives for universities to build more housing for international students, Mr Clare added.

But higher education providers say the industry is being made a “fall guy” for housing and migration issues, and that a cap would decimate the sector.

International education was worth A$36.4bn (£18.7bn, $24.7) to the Australian economy in 2022-23, making it the country’s fourth largest export that year.

According to economic modelling commissioned earlier this year by Sydney University – where foreign students make up about half of enrolments – the proposed cuts could cost the Australian economy $4.1bn and result in about 22,000 job losses in 2025.

Vicki Thomson, chief executive of a body which represents some of Australia’s most prestigious universities, described the proposed laws as “draconian” and “interventionist”, saying they amounted to “economic vandalism” in comments made earlier this year.

Mr Clare accepted that some service providers may have to make difficult budget decisions, but denied the cap would cripple the industry.

“To create the impression that this is somehow tearing down international education is absolutely and fundamentally wrong,” he said.