Universities and colleges will have an extra six months to prepare themselves for a cut to foreign student numbers after the government agreed to further consultation with the industry during fiery crisis talks.
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Federal Education Minister Jason Clare will be able to set a cap on international student enrolments under laws proposed by the government in a bid to "strengthen the integrity and quality of international education".
The sector acknowledged the unprecedented growth in international student numbers was unsustainable but warned chronic underfunding had forced public institutions to become reliant on lucrative student income.
Stakeholders feared the measures would be implemented on July 1, but secured a stay of execution until the beginning of 2025 in a meeting on Monday morning, said the chief executive of the industry's peak lobby group.
"People were angry at the start the meeting but it's fair to say that Jason Clare and (Home Affairs Minister) Clare O'Neil acknowledged that the policy situation hasn't been perfect," International Education Association of Australia chief executive Phil Honeywood told AAP.
"We've got to acknowledge that, whether it's a public university or a quality private college like an English language college, they've got staffing issues, they've got leases on commercial buildings, they've got business plans.
"So at the very least they deserve six or seven months to cut their cloth according to any new government policy framework."
Mr Honeywood defended the sector's reliance on foreign students, arguing governments had inadequately funded public institutions and left it to universities to come up with the money.
Ms O'Neil said the meeting was positive and the government would work closely with the sector to manage the "big changes".
The industry secured a carve-out for higher degree by research students from the cap in an acknowledgement research quality could not afford to be impacted by the change.
University of Sydney vice-chancellor Mark Scott said international students were invaluable to the economy and universities' funding models.
"If, in fact, international student numbers fell, there would be a further black hole in (research and development) funding, which is so important to the economic growth of the nation," he told ABC News.
Mr Clare said shonky agents were seeking to take advantage of international students amid an unprecedented influx following the easing of COVID-19 restrictions.
"International education is a valuable national asset. It doesn't just make us money, it makes us friends," he said after the meeting.
"These reforms will help to set it up for the future."
Education providers have been accused of lowering admission standards and using incentives for education agents to "poach" foreign students
The government says a ban on agent commissions on student transfers between providers in Australia will remove the incentives.
It will tighten controls around ownership and registration of education agents and providers, but the number of international students institutions will be limited to remains unclear.
The sector is looking to ensure carve-outs for students in regional areas and in-demand skills as consultations with the government continue.
International students provide a $48 billion boost to Australia's economy and employ 200,000 workers, making it the nation's fourth-largest export.
But they make up a significant majority of migrant numbers and critics have argued the sharp increase in numbers has worsened the housing affordability crisis.
The overseas student population in Australia reached an all-time high of 671,000 in March, a 15 per cent increase on the previous year.
Greens leader Adam Bandt said the government was attacking migration to divert attention from the real causes of the housing crisis - handouts to property investors.
The legislation will allow universities to enrol international students above the cap if they build additional student housing to free up pressure on the rental market.
Australian Associated Press
