A business leader has accused some MPs of "cheap and pathetic gestures" in their approach to student visas.
Simon Walker, director-general of the Institute of Directors, said he was "appalled" by how overseas students had been caught up in targets for reducing immigration into the UK.
Universities were "victims of political point-scoring", said Mr Walker.
But Immigration Minister James Brokenshire said the rules on student visas "strike the right balance".
A conference at Regent's University in London examined the visa system for overseas students with members of the Home Affairs Select Committee and representatives of the government, business, schools and universities.
It follows warnings from universities that the student visa process has become so rigorous that it is putting people off - and university leaders have lobbied for students not to be included in net migration figures.
It was a meeting of different sectors, but not a meeting of minds.
University representatives made strong calls for a different approach to visas for overseas students - while Mr Brokenshire asserted that many of their concerns were based on "myths and misconceptions".
Vivienne Stern, director of the UK Higher Education International Unit, which promotes the UK's universities overseas, said the decline in applications from Indian students to UK universities was a "serious cause for concern".
She said there needed to be a much clearer recognition that universities were global enterprises, in terms of academic staff and international partnerships for research.
This also meant an international student body, but in the UK she said that this was being jeopardised by immigration policies.
Ms Stern said that overseas student numbers were being sustained by an over-reliance on recruiting students from China.
There was strong criticism of the role of politicians in student visa policy from Mr Walker, head of the Institute of Directors, representing business leaders.
'Business common sense'
He said it was not "evil or racist" to voice concerns about immigration, but it was irresponsible for politicians to use these concerns to put up barriers to recruiting overseas students.
He said he was "appalled when politicians make cheap and pathetic gestures to what they think is public opinion".
He said it "damages this country in every sense".
Mr Walker said in a global economy it was "business common sense" for the UK to be open to attract the brightest students from overseas.
The benefit of "soft power" to the UK from overseas students was emphasised by Aldwyn Cooper, vice chancellor of Regent's University.
He said it was being "substantially eroded" by the current attitude towards overseas students - and that there would not be as many world leaders educated in UK universities as in the current generation.
Alp Mehmet from Migration Watch questioned whether it was really the visa process that had caused a dip in overseas applications last year - or whether it was more about the level of tuition fees being charged by universities.
Keith Vaz, chairman of the Home Affairs Select Committee, said the debate on immigration "simply cannot be ignored".
He said immigration was a "key issue for all political parties".
But he said "students are not migrants" and that there needed to be an "intelligent, factual debate" about student visas.
'Play by the rules'
If these arguments were pushing for a change in policy, the immigration minister made it clear that none was likely to be forthcoming.
He emphasised that there was "no cap on the number of international students" - and that claims to the contrary were fuelling "myths and misconceptions".
The inclusion of students in migration figures was in compliance with how the United Nations measured immigration, he said, and it was a measure used in countries such as the United States, Australia and Canada.
Migrants, whether students or otherwise, had an impact on public services, he said.
Mr Brokenshire also reminded the conference of the "money-making scams" that had operated in this sector, with estimates of 50,000 students in bogus colleges in 2009-10.
The government had had to intervene to protect legitimate students and the reputation of UK higher education, he said, with 750 private colleges stopped from recruiting overseas students.
The tightening of visa policy represented "sensible, long overdue reforms".
"For those playing by the rules, the UK is enthusiastically open," said Mr Brokenshire.