Thousands of Indian and other non-EU students are facing an uncertain situation due to the possibility of a major university in London losing its licence to admit overseas students as part of a crackdown on student visa abuse.

In July, the London Metropolitan University, which has offices in New Delhi and Chennai, was told that its 'highly trusted sponsor' status required to admit international students had been suspended by the UK Border Agency (UKBA) due to concerns over abuse of rules.

Representatives of the university, UKBA and the Universities UK said on Tuesday that no final decision had been taken to withdraw the university's status, but a decision on this sensitive issue was expected this week.

The London Metropolitan University is one of the major destinations for Indian students coming to the UK. Reports over the last two days claimed that the university was about to be stripped of the status to admit Indian and other international students.

A university spokesperson said it was 'understandable that Indian students were in a limbo', and added that a hotline had been established to offer help and support to international students at the university who had been affected by the uncertainty.

A UK Border Agency spokesman said: "We have not made a decision yet. Any education provider has to meet strict standards, ensuring they provide high quality education, and take their immigration responsibilities seriously. We will not tolerate any abuse of the immigration system."

Due to its suspension as a 'highly trusted sponsor' in July, the university is unable to accept fees from Indian and other international students already on courses and from those expected to arrive next month for the new academic year.

If the UK Border Agency decides this week to withdraw the university's status to admit Indian and other international students, it will also affect those students who are already on courses at the university.

They may lose the right to remain in the UK and return home if they are unable to shift to another university in the UK. Nicola Dandridge, Chief Executive of Universities UK, said: "Our understanding is that no final decision has yet been made in relation to London Metropolitan University's licence to sponsor international students".

"Universities take immigration compliance very seriously and in this case, the University has indicated from the outset its commitment to working with the UKBA to resolve outstanding concerns," she added.

Daniel Stevens, international students' officer for the National Union of Students, told The Guardian: "Students are now left in limbo, not knowing if they will have just weeks to find a new course or face deportation. Even those that do find new courses may find themselves thousands of pounds out of pocket and having to uproot to another part of the UK".

The university's vice-chancellor Malcolm Gillies feared an adverse impact of the UK Border Agency's decision on Britain's university sector.

"Not only will this decision have disastrous consequences for thousands of students but it may well have a catastrophic impact on the reputation of the UK as a destination for international students creating a knock effect for universities and all their students in the UK," he said.