Victoria's treasurer has accused federal Labor of hurting the state's economy following plans to cap the international student intake.
From 2025, the number of overseas students able to come to Australia will be limited to 270,000, as part of a bid by the federal government to reduce migration to pre-pandemic levels.
But Victorian Treasurer Tim Pallas said the move would have an "adverse effect" on the state's finances and job numbers.
"Not since Scott Morrison basically told international students to go home could we have come up with a more fundamentally destructive decision," he told reporters on Wednesday.
"To essentially tell international students we see them as a principle problem with regard to migration, it's just bad policy."
The $48 billion international education sector supports about 250,000 jobs across Australia, with overseas students having university fees three times higher than domestic students.
Mr Pallas urged his federal Labor counterparts to reconsider the cap.
"There's no need for this. There is absolutely no need for this," he said.
"They need to think about the impact this is having upon the Victorian economy, upon the Victorian reputation and upon the Australian government's reputation as a welcoming location for international students."
Acting Prime Minister Richard Marles defended the caps, saying while universities played an important role, it was critical to manage immigration.
"We still are in something of the wake of the aftermath of the pandemic. Immigration was at an unsustainable level and we needed to put in place measures to make it more sustainable," he told reporters in Sydney.
"You cannot manage immigration without managing student visas and so that's why we've put caps in place."
The cap is not expected to apply for students coming to Australia from Pacific nations or from East Timor.
Universities would be able to lift caps at institutions, provided they build more accommodation for students.
Nationals leader David Littleproud welcomed the cap but said it was crucial regional universities would not be affected.
"We don't want to disadvantage regional Australia for the number of international students. They're very important to their economic survival and financial survival but we do need to have a cap," he told Sky News.
Vicki Thomson, who is chief executive of the Group of Eight representing Australia's top universities, warned the cap would lead to fewer domestic students being offered places.
She said the measures would impact the bottom line of universities.
"If you start cutting our revenue source, we have to have some serious discussions around the number of domestic students we can have because we teach those high-cost courses," she told ABC radio on Wednesday.
"Every university will be looking at their bottom line because you can't rip out, in our case, potentially up to $1 billion in revenue in 2025 and that not have an impact on the bottom line."
Ms Thomson said the caps would lead to a 30 per cent reduction in international student intake or about 22,000 pupils.
Universities Australia chair David Lloyd said the cap was a financial risk to the country.
"If international students say they don't feel welcome in Australia, we run the risk of undermining the second-largest export industry in the country and damaging the economy," he told ABC TV.
