Home secretary Theresa May's plans to kick out foreign students after they graduate have been blocked by Tory leaders, in a campaign reportedly led by George Osborne.
May's proposal had already been slammed by leading entrepreneur Sir James Dyson, and it now looks as though it will be permanently relegated to the scrap heap after senior Tory officials said the measure would not be included in the party's manifesto.
Speaking to the Financial Times, one official said the Chancellor of the Exchequer had been a leading voice in warning the move would damage Britain's 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 paper was told. "That remains the policy."
Earlier this week, May said she wanted the Conservative manifesto to include a commitment to force students from outside the EU to leave the UK once they completed their degree, and to apply for a visa from their home country if they wished to return.
But Dyson said the government should be encouraging the brightest graduates to remain in the country and develop their ideas for the benefit of the British economy.
"Give them our knowledge, allow them to develop their own, and permit them to apply it here on our shores. Their ideas and inventiveness will create technology to export around the world," he said.
"May's immigration plans simply force the nimble minds we nurture to return home and fuel competition from overseas."