Universities will soon be barred from having unlimited numbers of international students able to enrol in courses.
Laws setting a cap on foreign student numbers passed the House of Representatives in federal parliament on Tuesday.
The changes are part of a broader suite of reforms cracking down on unscrupulous tertiary institutions targeting foreign students, and allow the education minister to place a limit on international students in courses.
Universities will only be able to increase their limit if they meet requirements such as building more accommodation for students.
International students numbers had increased significantly compared to before the COVID-19 outbreak in 2020, Education Minister Jason Clare told parliament.
"We have around 10 per cent more international students in our universities today than we did before the pandemic, and 45 per cent more international students in our vocational institutions," he said.
"At the moment, growth in international student numbers is essentially unregulated."
Caps on international students will take into account industries where skills are in higher demand.
University groups slam the move, telling an inquiry into the laws earlier in August students were being used as "cannon fodder" in broader debates on immigration ahead of a federal election.
But Mr Clare said the changes would make universities more sustainable into the future, while also cracking down on institutions looking to take advantage of overseas students.
"The actions of these unscrupulous providers damage the excellent reputation of this important sector," he said.
"We are shutting out those who might try to make a quick buck off our reputation as a place to get a great education."
The government agreed to changes put forward by independent MP Monique Ryan, which would review the student limits during the first half of 2026.
Debate on the laws is set to move to the Senate.
