There have been fresh calls for the Government to remove overseas students from its migration statistics, after Chancellor George Osborne said that voters were mainly concerned about "permanent" migrants, not those who return to their home countries after completing courses.
The Chancellor also slapped down suggestions reportedly floated by Home Secretary Theresa May for tougher English-language tests for overseas students and restrictions on post-graduates bringing dependants to the UK.
He told a House of Commons committee: "Those aren't Government policy. I'm not aware there's been any agreement in the Government or indeed any hard-and-fast proposals on that."
The education sector has long urged ministers to drop students from its target to reduce net migration below 100,000 a year, arguing that it means the UK missing out on a bigger slice of a lucrative and growing market.
Mr Osborne stressed that the independent Office for National Statistics was responsible for deciding how the figures were calculated and stopped well short of suggesting they should rethink the measure. But he acknowledged there was a "lively debate in all circles" on how migrants should be counted.
The Chancellor told the House of Commons Treasury Committee: "The public's concern about migration is about permanent migration, it's about people permanently or for many years staying in the country, and of course students come and go and I think that's a good thing for the UK.
"The current way the UK calculates its migration numbers, they are included. But if you talk about the Government's commitment on reducing immigration, I would say where that strikes a public chord and has public sympathy it is when we are trying to reduce permanent migration to the country."
Committee chairman Andrew Tyrie said that annual growth in international students had fallen from 6.5% in the decade before 2013 to 0.5% after that date. "You've made clear you want this number to grow," Mr Tyrie told the Chancellor. "There's been a collapse from very high levels to almost zero. Is that consistent with your aspirations for this kind of export?"
Mr Osborne said he was expecting a 65,000 increase over the coming years, adding: "I think what you have seen is a quite healthy growth in international students in bona fide institutions in what everyone would regard as proper degrees but a very tough and correct clampdown on bogus routes into the country via the student visa system. I think that's the right balance."
Asked if the measure should be reformed, Mr Osborne said: "The Office for National Statistics determines the exact statistics, but the Government's ambition is to reduce permanent migration to this country to a more manageable level and at the same time to have a successful university sector in which come and study and then leave.
"The ONS are an independent organisation but there's a lively debate in all circles about how this number is best calculated in the UK."
The Institute of Directors (IoD) seized on Mr Osborne's comments to renew its call for students to be removed from the Government's net migration target.
IoD head of employment and skills policy Seamus Nevin said: "We welcome the Chancellor's acknowledgement that most students who come to the UK to study are not permanent migrants. Government must follow through on this undeniable logic and remove international students from the net migration target.
"Education, particularly higher education, is one of this country's greatest success stories. Higher education is one of the UK's biggest exports, adding over £10 billion a year to our economy. If George Osborne wants to boost our universities and our economy, he should take this simple step as soon as possible."
Labour MP John Mann said that figures in last week's Spending Review suggested that the Chancellor's target of bringing the UK's budget into surplus by 2019/20 was "predicated fundamentally" on the taxes and consumption generated by bringing one million more migrant workers into the country.
But the Chancellor said he did not accept Mr Mann's argument, pointing out that many of the jobs being created in the economy were going to UK nationals.
Asked in a Westminster press briefing whether the Prime Minister accepted that migration was helping the Government achieve a surplus, David Cameron's official spokeswoman said: "Is there a role within a growing economy for sustainable migration? That is part of our approach. The challenge is trying to achieve better control over migration reflecting the kind of pressures it can place on local services."
As debate raged at the Treasury Committee hearing over the precise numbers of migrants in the country, Mr Tyrie told Mr Osborne: "This area is bedevilled by lies, damned lies and statistics." The Chancellor responded: "I deal in statistics, rather than the first two."