In a letter made available to Channel 4 News the foreign secretary warns David Cameron that including students in net migration figures causes “immense damage” to Britain.

David Cameron has been warned by his own foreign secretary that including overseas students in the government’s net migration target risks jeopardising Britain’s reputation abroad.

In a letter to the prime minister Philip Hammond writes: “From a foreign policy point of view, Britain’s role as a world class destination for international students is a highly significant element of our soft power offer. It’s an issue that’s consistently raised with me by our foreign counterparts.”

Mr Hammond joins the chancellor and the business secretary in calling for the student figures to be stripped out of the target to reduce net migration from its current 330,000 to less than 100,000 by the next general election. “It is time to make the decision to count separately international students coming to study here in the UK, so long as they are here for legitimate study,” his letter states.

His intervention leaves the home secretary Theresa May increasingly isolated in continuing to insist that overseas students form part of the figures. The latest data shows that in the year to the end of March the number of overseas students coming to the UK for more than a year rose from 176,000 to 188,000. Some three quarters of them were non-EU citizens.

One government insider told Channel 4 News: “It’s doing immense damage to Britain round the world. We are talking about potentially having to really clamp down on these foreign students in order to meet the 100,000 target. We are in danger of having to shut the doors.”

A spokesperson for Downing Street said that though they wouldnt comment on this specific letter they re-iterate that the prime minister is committed to bringing migration down to the tens of hundreds.

‘We are in danger of having to shut the doors’

As a result, the source claimed some science, technology, engineering and mathematics (STEM) subjects were at risk of being axed by some universities, because they relied on overseas students to make those courses economically viable. That would be highly embarrassing to the government, which has campaigned to boost participation in STEM subjects.

The government source also noted that overseas students could be worth £12bn a year in higher education fees by 2020. “We don’t have many globally competitive export industries. We should celebrate that rather than regard it as a plague of immigration,” the source said.

In his letter, Mr Hammond – one of the most right-wing and Eurosceptic members of the cabinet, said the public would support his suggestion, though allies of the home secretary are believed to be concerned about being accused of trying to “fiddle” the immigration figures.

Mr Hammond wrote: “I believe the public understands the distinction between temporary student migrants and economic/family migrants. Public concern about the level of immigration is driven principally by long-term immigration for settlement in the UK, not short term immigration, particularly if the primary purpose of that immigration is for legitimate study.”

The prime minister now faces a difficult decision between backing his home secretary or siding with the chancellor, foreign secretary and business secretary.