Britain is losing tens of thousands of overseas students every year because of errors and obstructive behaviour by the immigration authorities.
The findings, to be released later this week, blamed the point-based immigration system for the £8.5 billion (S$20 billion) loss a year to the British economy.
The controversial system, introduced in March, was designed to crack down on bogus students and prevent terrorists from entering the country.
But the study has found that immigration officials working for the UK Border Agency in embassies and high commissions are misinterpreting the new rules and refusing visas to genuine students, the Guardian reported.
The study, by the UK Council for International Student Affairs, questioned 2,777 international students who applied for a visa between July and September.
It found that two-fifths of the students had difficulties or encountered 'errors or obstructions' that put them off studying in Britain or resulted in them being refused visas.
One was refused a visa for putting her nationality as 'Nigeria' rather than 'Nigerian'. Others had their passports lost by officials or sent to the wrong addresses. Some had the wrong nationality stamped on their forms. At least 10 per cent were refused a visa on their first attempt, but were successful later.
According to Home Office figures, fees paid by overseas students amount to 8 per cent of the total income of British universities. Turning them away could threaten the universities' financial stability and undermine the country's international reputation for higher education.
Immigration Minister Phil Woolas last month admitted that more than 23,000 overseas students had been forced to reapply for their visas in the last six months and had been granted them on the second or third attempt.
A UK Border Agency spokesman said care is taken to ensure all rules are followed, adding: 'While there will always be people who will try to abuse our immigration rules, we have robust systems in place to ensure that only those students who are genuinely coming to the UK to study can do so.'