SYDNEY - Violence against Indian students has damaged Australia's reputation and will lead to a drop in the number of foreign students, Foreign Minister Stephen Smith said.

Smith said late Tuesday that a spate of violent attacks on Indian nationals, mostly in the southern city of Melbourne, had contributed to growing questions over the integrity of Australia's overseas education system.

"I've made it clear that I think on the student safety issue, our reputation and standing in India has been damaged."

Unscrupulous educational institutions luring Indian students to Australia with the promise of the chance to remain in the country had also contributed to the damage and would cause a drop in student arrivals, he said.

Thousands of students were left stranded after a string of private colleges collapsed in the wake of the global financial crisis and following revelations about dodgy operators.

"I think on the collapse of the colleges and the focus on integrity, we will see a drop in the number of Indian students coming to Australia, I think for three reasons," said Smith.

"One, the safety issue; two, the general adverse consequences of the global financial crisis, and three, the integrity or quality issues."

But Smith said he expected the drop in enrolments to be short-lived.

A damning government review of the 15.5 billion US dollar education sector commissioned after violence against Indians, published on Tuesday, found some colleges catering to foreigners operated more as visa factories than education providers.

The review's chairman, Bruce Baird, recommended a regulatory crackdown on unethical recruitment practices, including fines for deliberately misleading students.

Baird also said more needed to be done to help foreign students feel more a part of Australian life, following a spike in violent attacks against Indian students.

Foreign student numbers jumped from 228,119 in 2002 to 491,565 by 2009, with international education now Australia's fourth largest export industry.