Labour has accused the Government of "rank populism" for adopting immigration policies they claim will harm the country's economic prospects.

Lord Liddle, an Opposition foreign affairs spokesman, said ministers were creating "crucial new obstacles" in the way of a successful economic relationship between the UK and India.

In a House of Lords debate on links between the two countries, Lord Liddle told peers: "The number of applications from Asia to Russell Group universities is falling very fast.

"How can any nation so comprehensively shoot itself in the foot simply in order to fulfil a stupid populist policy that was included in the Government's manifesto in terms of immigration? It is simply shooting our future prospects in the foot for the sake of rank populism."

And Labour academic Lord Parekh said the Government had made "a great mistake in restricting post-study work visas".

He added: "Under the current scheme students coming here after graduating or post-graduating can work for two years. This allows them to gain experience and to contribute their skills to this country. It benefits both sides.

"The restrictions the Government are proposing are very rigid. There are 39,000 students who were granted visas last year for up to two years. The Government wants to reduce this by half, which is extraordinary.

"Germany has decided that students who have graduated will be able to stay for a year to look for a job if there are sufficient maintenance funds. New Zealand is doing the same, Canada is doing the same and I'm really sorry we seem to be creating a situation where we are discouraging Indian students from coming here."

Their warnings came the day after a Universities UK report showed the number of non-European Union students in higher education in this country had more than doubled in the past decade.

But the report warned the UK's share of the international student market had reduced and student visa changes may result "in a greater loss of market share in the future".

PA, photo by londonweekly