Figures from the Universities and Colleges Admissions Service (Ucas) show that the financial crisis in Malaysia, traditionally one of the largest sources of overseas students, and competition from universities in other countries, are depressing demand.
The number of students applying from the Irish Republic, where tuition fees were abolished last year, has also fallen sharply. Here, the Government introduced annual tuition fees of pounds 1,000 last September.
Overseas student numbers in Britain have been rising steadily for a decade. They now account for more than one in 10 of all students and universities estimate they bring pounds 1bn a year into the economy.
Overall, applications for higher education are down by 1.8 per cent but more than half the fall is accounted for by the drop in applications from overseas. The decrease in mature applicants continues but the number of applicants from this country who are under 21 is up by 0.4 per cent.
Tony Higgins, Ucas chief executive, said: "There has been a slight overall decline in applications but the picture is similar to last year and there is no evidence tuition fees are putting people off higher education."Reuse content