Students from outside the European Union will be forced to go home after completing courses under plans to scrap visas which allow them to seek work.
The controversial post-study work route will be abolished and only "trusted" sponsors will be able to offer courses below degree level to adults.
And measures to ensure students return home following their studies will be introduced under the Home Office plans.
The proposals are part of a crackdown on abuses of the student visa system.
The majority of migrants from outside the UK are students - last year they accounted for two thirds of the visas issued under the points-based system.
The government wants to reduce these numbers as it tries to fulfil its pledge to cut net migration from 200,000 to under 100,000 by 2015.
Immigration Minister Damian Green said: "I believe attracting talented students from abroad is vital to the UK but we must be more selective about who can come here and how long they can stay.
"People imagine students to be those who come here for a few years to study at university and then go home - that is not always the case.
"Too many students coming to study at below degree level have been coming here to live and work, rather than studying. We need to stop this abuse.
"Today's proposals follow a major review of the system, and are aimed at a more selective system and, crucially, reducing the numbers to meet our target of reducing net migration to sustainable levels."
But the Institute for Public Policy Research said cutting the numbers of foreign students would have a limited effect on net migration levels.
Associate director Sarah Mulley said: "Foreign students contribute a huge amount to the UK education sector and to the wider economy.
"It is right to clamp down on abuse of the visa system but these proposals are driven primarily by the government's objective of reducing net migration by more than half.
"In its efforts to meet this objective, the government risks causing significant harm to a highly-successful export sector at a time when the economy is still vulnerable."