Australia has reduced the number of student visa approvals in a bid to stop rorting of the international education system.
Approval rates dropped by 40 per cent in January compared with the same period last year, according to government sources.
Labor is seeking to ease pressure on infrastructure and housing in addition to improving the reputation of Australia's higher education sector.
The nation's population grew by 624,100 people last year, with net overseas migration accounting for 518,100 people.
International Education Association of Australia chief executive Phil Honeywood said the government was trying stop people using the visas as a labour hire scheme, instead of coming to the country to study.
He warned Australia could miss out on the skilled migrants it needs to address workforce shortages if the wrong message is sent to students overseas.
"The combination of recent policy announcements has culminated in a levelling off of overall student numbers," he told AAP.
"Every Australian government has often overreacted when it comes to concerns about student numbers.
"Time will tell whether this is another case of overreaction particularly given Australia is in a global race for talent in a whole range of job vacancies."
Mr Honeywood said given the crackdown was focused on diploma-level vocational students, he did not anticipate the sector would experience a major impact on its enrolments.
A spokesman for Home Affairs Minister Clare O'Neil said the "broken" migration system was ill-equipped to manage rorts in international education.
"Our changes will allow Home Affairs to protect the integrity of our international education system," he said.
