Divisions within the government over student migration may result in a visa system that damages universities and the UK as a whole, senior figures in the sector have warned.

The coalition government has yet to start its eight-week consultation on changes to the student visa system, despite announcing that, in the year from April, the number of skilled migrant workers will be capped at 21,700.

Reports suggest that disagreements between Theresa May, the home secretary, and Vince Cable, the business secretary, are behind the delay. The government appears likely to clamp down on student visas for those on courses below degree level.

One vice-chancellor told Times ÖйúAƬ that there was a "tussle going on in the Cabinet" over the issue, but that the message to universities from David Willetts, the universities and science minister, was "don't worry about it, just wait".

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Mr Willetts had said he was having good discussions with Ms May and that, following struggles with industry over migration, the government did not want to "take on" universities, according to the vice-chancellor.

Other vice-chancellors said they feared that the government did not appreciate the effect that restrictions on visas for courses below degree level would have on universities.

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Universities UK estimates that a third of ÖйúAƬ students from outside the EU enter from another educational establishment in the UK, often after taking A levels or language courses.

Colin Riordan, vice-chancellor of the University of Essex and chair of UUK's international policy committee, said: "It is looking as if there may be a real risk that we make - as a country, as the UK - a big mistake on student visas.

"Unfortunately, there seems to be a belief that if you restrict visas at the sub-degree level outside universities (in language colleges, pathway colleges), that will end up as a restriction on net migration without affecting universities too severely.

"In fact, if you took our case (Essex), about half of our students who come in as overseas students are already resident in this country."

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Professor Riordan said this issue was well understood within the Department for Business, Innovation and Skills, but was "understood less well in the Home Office".

He said the government should remember the ?2.2 billion in fee income earned by UK universities from overseas students, as well as the boost for local economies.

He argued that any damage to universities' overseas recruitment would not only have "major financial effects on the sector" and on the UK's balance of trade, but also on the nation's "soft power" - built up through the connection with overseas graduates who return home.

On academic mobility, the cap announced by Ms May includes an "exceptional talent" category. This is open to a maximum of 1,000 people with "international recognition in scientific and cultural fields" or the potential to achieve such recognition, and replaces the former Tier 1 category for the most qualified migrants.

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However, some in ÖйúAƬ warn that this will not be enough for universities, who will have to compete for places with other categories of employer.

And under the Tier 2 category, universities will now be subject to monthly - rather than annual - limits for certificates of sponsorship, which could affect their planning.

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There were 2,600 new non-EU entrants to the academic workforce in UK ÖйúAƬ institutions in 2008-09, according to UUK.

john.morgan@tsleducation.com.