The London-based international economist Mariana Mazzucato has said her application for permanent residency in the UK was turned down, prompting renewed anger about the government’s immigration policy.

Mazzucato, the founding director of University College London’s Institute for Innovation and Public Purpose and the author of several influential books on the economy, was born in Italy but has lived in the UK for 20 years.

She applied for permanent residency in 2017, a few months after the UK voted to leave the EU. On Thursday she tweeted that her application had been refused and her Italian passport kept by the Home Office for six months.

Immigration officials blamed a credit card problem with her application fee, she said, adding that there was no problem with her card.

I've lived in UK for 20 yrs with full time academic job. Had 4 kids here. My application for permanent residency was turned down. Supposedly credit card for application fee did not work (card was fine). Kept my Italian passport for 6 months. Could have called to check number? Nah — Mariana Mazzucato (@MazzucatoM) November 8, 2018

A spokesman for University College London said Prof Mazzucato did not want to elaborate on her Twitter update. Later, after her tweet prompted widespread outrage, it clarified that she was referring to an incident in 2017.

Mazzucato joined Jeremy Corbyn’s Economic Advisory Committee in 2015 and 2016 alongside other big name economists, including Joseph Stiglitz and Thomas Piketty. She is a member of the Scottish government’s Council of Economic Advisers.

Her attempt to secure permanent residency ran into problems over a mixup about single digit on her 85-page application. “My ‘big’ error was making 4 look like 9 in my credit card number,” she tweeted in May 2017. At the time she said her application had to be resubmitted.

Oh and in case you are wondering: my ‘big’ error was making 4 look like 9 in my credit card number. The application costs money. No mercy. https://t.co/f6CDpSyFYT — Mariana Mazzucato (@MazzucatoM) May 12, 2017

UCL has been asked to clarify whether she has since reapplied for permanent residency.

The Home Office confirmed that Prof Mazzucato’s application was refused in May 2017. A spokesman said: “All applications are considered on their individual merits, and in line with the immigration rules.”

Labour’s deputy leader, Tom Watson, was one of many prominent figures to express his support for Prof Mazzucato. “You’re making a fantastic difference for this country,” he said in reply to her tweet.

The incident comes amid growing frustration at British universities about the impact of the government’s immigration policy on foreign academics and international conferences hosted in the UK.

Prof Martin McKee, head of European public health at the London School of Hygiene and Tropical Medicine, said he was sickened by Prof Mazzucato’s treatment.

This, from @MazzucatoM , one of world's leading economists, is unbelievable. Actually, it's worse. UK Home Office's behaviour is sickening. What the hell is happening to this country?

How can any EU27 citizen have any confidence?

How can any EU27 leader trust UK govt? https://t.co/rThJBcBfaB — Martin McKee #FBPE (@martinmckee) November 8, 2018

Prof Iain Gray, director of aerospace at Cranfield University and a former head of the technology board Innovate UK, also expressed alarm. “We seem to have our values all wrong,” he tweeted.

This is awful .... @MazzucatoM has been a leading shaper in UK economic thinking and major contributor to UK society ... we seem to have our values all wrong — Iain Gray (@iain_gray) November 8, 2018

Jolyon Maugham, a leading barrister who has campaigning against Brexit, said her treatment should be a source of national embarrassment.

Mariana has made an incredibly important contribution to the intellectual life of the country, and indeed society at large. This both shames and diminishes us. https://t.co/ImOGLzPzDq — Jo Maugham QC (@JolyonMaugham) November 8, 2018

The immigration lawyer Shoaib Khan said the way officials appeared to have dealt with Prof Mazzucato’s case was typical of how they treated hundreds of people every day.