The house of Lords voted to take international students out of the UK's net migration figures.
Peers backed an amendment tabled by Lord Hannay of Chiswick, stating that no student should be treated for public policy purposes as a long term migrant to the UK, for the duration of their studies.
The amendment passed with a large majority in favour 313 votes vs 219. The defeat is a set back for Downing street. Theresa May, who in her capacity as Home Secretary and most recently Prime Minister, did not support removing international students from net migration figures, which recent governments have pledge to bring down by "tens of thousands."
This policy has resulted in international numbers from certain countries reducing and UK institutions, loosing out to competitor countries, such as the US and Australia. The UK is currently second to the US as a provider of higher education. Lord Hannay warned that the UK is "loosing market share to our main competitors"
The Department of Education voiced its disappointment in the vote. However, the amendment will next be considered by MPs who may choose to accept or reject it. Should the bill pass, then the government would be forced into a situation where it has to encourage international students and cooperation between UK and overseas institutions.