The country's higher education establishments will suffer under the changes, it has been suggested.
The UK visa restrictions due to come into effect in April this year will have "dire consequences" for the UK's higher education establishments.
This is according to the Higher Education Policy Institute (Hepi), which has published report analysing the proposed changes.
According to Hepi, had the restrictions on non-European Union students been introduced in 2005, the impact on the UK's economy would have been "awesome in terms of both balance of payments and job creation".
Indeed, the 2008-09 income from university fees, which was actually around £2.3 billion, would have been cut to just over £1 billion had student UK immigration been capped.
Professor Edward Acton, vice-chancellor of the University of East Anglia and author of the report, also questioned the suitability of figures used by the government in determining suitable changes to UK immigration policy.
He noted: "If the government is determined to be guided by International Passenger Survey data and to discourage international higher education recruitment, we need certainty about the matter."
The professor explained that there are currently some "considerable British resources" being spent on attracting international students, which should be "drastically curtailed" if the cap is to go ahead. He added that foreign secretary William Hague should also consider rethinking his announcement issued in January, which suggested that British ministers will be promoting British education when they travel internationally.
Finally, the report spelt out the possible consequences in store for universities.
"The Higher Education Funding Council for England can revise its list of 'at risk' institutions. Universities can plan with local authorities how to cope with the rapid loss of income, shedding of jobs and singularly ill-timed damage to university cities and regional economies that will follow."