The government is 'holding fire' on changes to the rights of international students to work while studying, after officials advised a cautious approach was needed to protect tertiary institutions.
But Immigration Minister Iain Lees Galloway still has work rights for students who have completed study in his sights, to remove what he calls the 'back door' to residency through the student visa scheme.
Labour campaigned on overhauling immigration settings to make sure new migrants have the skills the country needs], and to reduce the number of people on temporary work and student visas.
Ministers have been told by officials the student visa scheme has led to a downgrading of the skills of new migrants over the last five years.
It has been a controversial sector, and the previous government had to make changes to visa settings in the face of fraudulent visa applications and exploitation of students by employers.
In the Indian market alone, applications dropped to about 9500 last year, down from nearly 26,000 in 2015.
Official advice is that because of the drop, the Immigration Minister should think carefully before making any major changes.
Labour campaigned on limiting students' ability to work during and after studies.
Mr Lees Galloway said work rights for students who had completed study were his immediate priority.
"What I have decided to do is focus on post-study work rights and to just to hold fire on in-study work rights because they have a very direct impact on the tertiary providers."
Chris Gosling is the CEO of Whitireia Polytechnic and the Wellington Institute of Technology.
He said revenue from international students has dropped in past years, but domestic students still pay the bulk of the fees.
The big issue for them, he said, was uncertainty, especially around issues like work rights.
"We'd welcome some clarity and certainty around that because we go out and talk to prospective countries and they have work rights ... they want as much certainty as possible"
National tertiary spokesperson Paul Goldsmith said Labour was now backing off what was a cynical election campaign promise to slash immigration numbers by tens of thousands.
"At the time we said that was crazy and potentially very damaging to [the] export industry."
Mr Goldsmith said a cautious approach was now needed, to minimise the impact on the international education sector.
Education Minister Chris Hipkins said courses varied in quality and he was making no promises to institutions offering low value courses.
"If a provider has been established to deliver low quality international education for the purposes of turning a quick buck, I make no bones about the fact that we're seeking to drive them out of the market.
"The days when people set up these 'slap-up' international education outfits are well and truly gone."
The briefing documents also said the previous government agreed to visa changes to restrict the eligibility of partners of international students to get work visas, and for dependent children to attend school in New Zealand.
Cabinet still has to decide whether the government goes ahead with that rule change.