Britain's immigration policy has been bad PR for the country abroad and is putting off students, according to the science minister.
David Willetts said that moves to reduce the number of people coming to the UK to the tens of thousands by next year had "played disappointingly badly" in India and had hampered the effort to attract international candidates.
It comes despite a charm offensive by ministers and an admission by the Prime Minister during a visit in November that plans to charge a £3,000 visa bond to ensure people didn't overstay had caused alarm.
Mr Willets said that the number of students from India had dropped by 38% by 2011 and 2012 and blamed it on the way India had reported on British immigration policy.
He said that by contrast there had been an increase in the number of applications to study from China, where press controls are significantly tighter.
David Cameron with Indian Prime Minister Manmohan Singh in November In an interview with Total Politics magazine, he said: "It has played disappointingly badly on the Indian sub-continent.
"I've been with the Prime Minister to India on several occasions, and we both make the point that legitimate students can apply, with no number controls.
"But it's a striking contrast: in China, that is completely understood. The number of Chinese students coming to Britain continues to surge, which shows it's not a matter of British policy. It's about the different ways it's perceived and reported in India."
During a visit to India in November Mr Cameron called for "calm language" on immigration.
The Prime Minister has also been under fire in Europe for his immigration policy after introducing stringent measures amid fears of an influx of Romanians and Bulgarians at the beginning of the year.
Science minister David Willets European Commission vice president Vivian Reding accused Mr Cameron of peddling myths about a "foreign invasion".
And employment commissioner Laszlo Andor warned Britain was at risk of being seen as the "nasty country".
Speaking on the Radio 4 Today Programme, he said Brussels was preparing to rule on whether the curbs on European Union migrants claiming benefits would be challenged.
EU migrants will have to prove they are earning at least £149 a week for three months from March 1 before they are allowed to claim benefits including child tax credits, child benefit and job seeker's allowance if they lose their jobs.
Mr Laszlo said that the new rules were likely in contravention of EU law.
Plans to charged a £3,000 visa bond were dropped by the Government.
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