Boris Johnson has warned the government not to be prejudiced against foreign students who want to study in the UK.
Speaking ahead of an address to Indian students in Delhi, the London Mayor said new rules introduced last year by ministers to slash the number of bogus colleges sent out the "wrong signal", adding that he feared they would hit the £2.5bn revenue stream British universities earn from overseas students.
The industry played an important part in subsidising domestic undergraduates, the mayor said, as he announced plans to set up an Education Export Commission with central government to examine whether foreign students were now choosing to study in the United States, Canada and Australia instead.
London Mayor Boris Johnson is mobbed by school children in Delhi as he warns the government of prejudicing against foreign students
Johnson has been a vocal opponent of the new restrictions, which include higher standards of English literacy and refusing overseas graduates the right to stay in the UK unless they can secure a job with a salary above £20,000.
Britain's previously popular reputation as a destination for international students took a battering in August after the UK Border Agency stripped London Metropolitan University of its right to recruit overseas. The decision meant hundreds of foreign students faced being sent back home, many of whom had harsh words for the government.
Labour MP Jeremy Corbyn claimed at the time the decision created an "appalling" image of Britain and would deter foreigners from studying in the UK.
According to Johnson's figures, the number of Indians applying to study in the UK dropped 9% this year and is forecast to fall a further 25% next year. Of the 110,000 foreign students in London alone, 9,000 are from India, where Johnson is spending this week trying to build business links with the capital.
In interviews ahead of a speech to prospective students at Amity University, the equivalent of Oxford or Cambridge, Johnson said he was worried the "mood music" from Whitehall was putting the very best off applying.
He said: "We are going to set up with government an Education Exports Commission to look at the issue to make sure we get the right message across so that if the government decides to make changes to the visa regime it doesn't do damage to a sector in which London is so strong and it is so valuable.
"The vast majority of Indian students do get a visa, 75% of them get one pretty much straight off. It's more of a perception at the moment.
"The policy on visas is, in my view, sending out the wrong signal. There are so many stipulations that we are starting to lose business to Australia, America and Canada.
"As I have written several times to the home secretary, we need to see a strong statement of welcome to make sure that the visa system is not a deterrent to international students.
"The extra stipulations such as the need to have a salary of up to a certain amount before you are allowed to stay on mean we need to be very careful that we are not doing stuff that actively deters foreign students and at the moment the policy seems to put people off. Why are we doing this? We shouldn't be losing this market."
He added: "It's very important for our higher education economy that you have foreign students who contribute £2.5bn a year in fees. Now that helps to subsidise the rest of the university sector - helps to pay for everybody else's education.
"It's a great idea to have a London that is open to that kind of business. I am saying to the government 'Don't do things that is going to cause unnecessary alarm and prejudice against the UK'."
In a letter to Home Secretary Theresa May on Monday, Johnson said he wanted student visa statistics to be removed from the overall net migration target of less than 100,000.
The Migration Advisory Committee must also look at the economic impact of the government's policy on student visas, he said.
Johnson wrote: "To mitigate future reputational risks, safeguards need to be in place to protect the investment international students make when choosing London and the UK as their destination.
"I would ask that you introduce new measures in the student visa system to protect genuine students from circumstances when a sponsor loses its licence. These measures should include as a minimum permission to complete studies or the academic year, whichever is soonest."
The International Students Officer for the NUS welcomed Johnson's comments.
"It’s positive to see Boris Johnson challenge the Home Office’s policy towards international students and call for them to be removed from net migration statistics," spokesman Daniel Stevens said.
"The international reputation of the UK has been harmed by this short-sighted policy. The message unfortunately is that the UK is still very much 'closed for business.' A change in policy is needed urgently else the damage will be irreversible."
In a separate conversation with reporters, Johnson was more critical of the government's policy.
He added: "In 2004, Labour basically decided the brake's off and that led to all sorts of unforeseen consequences.
Immigration wasn't properly controlled and the Government is trying to sort out an immigration problem, and there is certainly an immigration problem, but you have got to make sure you target the right area.
"I think higher education, which has traditionally attracted very bright people and is good for the London economy, is not the area to do it.
"London was founded by a bunch of pushy immigrants - the Romans. There wasn't a London at all until immigrants came. The important point is that sectors in London that have always been strong should continue to benefit from talent from abroad and I don't want them to be the accidental victims of a policy that was really designed to counteract a mistake a decade ago."