A fall in net migration to the UK was overshadowed as a group of influential MPs reacted angrily to the Government's refusal to remove foreign students from its target.
A net flow of 163,000 migrants came to the UK in the year to June 2012, down from 247,000 in the previous year, the Office for National Statistics (ONS) said.
The coalition Government hailed its "tough reforms" but was immediately scalded by the Business, Innovation and Skills (BIS) Committee for rejecting calls to take international students out of its target to reduce non-EU migration to the tens of thousands by 2015.
"The Government should listen, think again and change course," the committee said.
The decline in net migration was driven by a drop in the number of immigrants coming to Britain, which fell from 589,000 to 515,000, while the number of migrants leaving the country rose from 342,000 to 352,000.
The most common reason for migrating to Britain remains study, the ONS said, but this was also declining "significantly".
Some 197,000 foreign students arrived in the period, down 17% or 42,000 from 239,000 in the previous year, while the number of visas issued for study - 209,804 - was 20% lower.
In a report last year, the BIS Committee said the inclusion of international students in net migration figures risks undermining a world-class export market. But in an official response released on Wednesday, the Home Secretary said all the UK's major competitors include students in their net migration figures.
The BIS Committee said: "The Government's response was late, woefully short on detail and fails to take account of recent developments. It seeks to underplay the urgency of the problem and thus excuse the failure to act decisively to address this serious matter."
Sponsored visa applications rose 3% in the university sector, but fell 62%, 69% and 14% for further education, English language schools and independent schools respectively.