A perception that standards are falling at British universities is spreading internationally and could lead to a decline in vital income from overseas students, a senior sector figure has warned.

Bahram Bekhradnia, director of the ºÚÁϳԹÏÍø Policy Institute, said that UK higher education's "remarkable" success in attracting international students was dependent on its reputation for quality, a factor that offsets the high costs of studying in Britain.

But he added that the head of a "large multinational" had recently told him that the company would no longer appoint graduates of UK universities to technical posts, as their knowledge was perceived to be poor.

And he referred to a French university that will not accept British exchange students on science and engineering programmes, even those offered in English, because it had had to run remedial courses to improve their technical knowledge.

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"The stakes are high," Mr Bekhradnia told the Lord Dearing memorial conference. "We may find students are inclined no longer to regard the UK as the best choice."

The International Student Barometer, an annual online survey of international students, shows no sign as yet of registering these concerns, he said.

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"Nevertheless, I fear that some of the negative perceptions I refer to are bound to filter down and slowly undermine the reputation of our university system," he added, which would in turn affect foreign students' appetite to study here.

Mr Bekhradnia criticised the vice-chancellors who appeared before the Innovation, Universities, Science and Skills Select Committee last year for their "excessive reluctance to concede that there may be issues that need attention in relation to standards and quality".

He pointed to the "substantial economic benefit that international students bring to the UK higher education system".

"More than 8 per cent of total income for universities in England comes from international student fees," he said - "more than the research assessment exercise".

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"It is more worthwhile to put effort into recruiting more international students than it is to improve RAE scores," he said.

The high fees charged by British universities mean it is critical that their reputation for quality is maintained, Mr Bekhradnia argued.

"Our reputation for high quality outweighs the cost, it outweighs the poor climate and the better lifestyles in other countries," he said.

"Our reputation for quality is really important and is something that, if we lose it, will be extremely serious for our prospects in the marketplace."

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In a separate lecture, David Greenaway, vice-chancellor of the University of Nottingham, highlighted Chinese higher education's "very strong focus on technical education", which he said "spectacularly exceeds that in the West".

He added that despite the financial crisis, the prospects for higher education globalisation remained "pretty promising".

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john.morgan@tsleducation.com.