"We cannot support measures which will only serve to compound this crisis," senior opposition members Sarah Henderson, James Paterson and Dan Tehan said in a joint statement on Monday.

Coalition politicians, including Opposition Leader Peter Dutton, previously expressed support for student caps.

The change of mind prompted a stern response from Education Minister Jason Clare who said the coalition could not be trusted on the issue.

"Peter Dutton might pretend to be a tough guy on immigration, but the truth is he's a fraud," he told reporters in Canberra.

"You can't talk tough on immigration and then go soft on this."

The legislation will replace an immigration rule, known as ministerial direction 107, that has been blamed for an increase in visa refusals at a number of universities because it prioritised visa processing at institutions where international students were more likely to graduate.

The post-pandemic influx of overseas students has been blamed for Australia's housing crisis, a claim dismissed by the property sector.

Universities say the government is waging a war on a sector worth almost $37 billion to the Australian economy.

"This is not only a sledgehammer to our sector, but it's economically reckless," Universities Australia chief executive officer Luke Sheehy told reporters in Canberra.

"(Universities) will continue to be in a state of pain that they have been for many many months, and a state of anguish because of the funding uncertainty and the policy chaos."

The Greens also oppose the government's legislation, meaning it won't clear the Senate unless an agreement is reached with either the coalition, or the minor party and crossbench.

"This flawed policy will hopefully never see the light of day," Greens senator Mehreen Faruqi said.

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