Students coming to the UK from outside the EU to study should be stopped from seamlessly moving into work in order to give British graduates the best chance of finding a job, Immigration minister Damian Green has said.
Plans to reform the current system that allows non-EU students to work in the UK for up to two years after completing their studies will be part of the Government's crackdown on student visas.
Graduate unemployment hit its highest level for more than a decade last week, with a fifth out of work.
"It seems to me that to allow unfettered access to the jobs market for two years to anyone with a student visa from abroad is putting an unnecessary extra strain on our own graduates," said Mr Green.
"That's clearly an area where the current system is too generous. We want to encourage people to stay in education for as long as possible.
"If they think they are going to incur the expense of a student course and then not have a job at the end of it, then that will discourage people from doing the best for themselves, which is to be as educated as possible. It's quite important that we have a proper fair playing field for British graduates in the jobs market."
Figures released by the Office for National Statistics (ONS) last week showed 20% of new graduates were unemployed in the third quarter of 2010. This was almost double the rate before the start of the recession, when it stood at 10.6%.
Graduate unemployment also increased faster than for the UK as a whole, the figures showed.
Prof Edward Acton, vice-chancellor of the University of East Anglia, said the Government's plans amounted to a "hostile act against Britain's universities".
Tony Milns, chief executive of language teaching association English UK, said "at least 60-70,000" students come to learn English and go on to take a university course every year.