Tighter visa restrictions are sending the "wrong signal" to foreign students and many are being lost to others parts of the world, Boris Johnson has warned.
Speaking in India, the mayor of London said the UK should strongly welcome foreign students, not deter them.
Rules preventing them staying after graduating unless they get a £20,000 job were putting many off, he added.
Ministers say they are committed to reducing net migration levels and students cannot be exempted from this.
There are about 300,000 students from outside the European Union enrolled at courses at UK institutions and numbers rose 6% in 2010-11 - the last year for which official figures are available.
On the second day of a visit to India in which he is seeking to boost economic and cultural links, Mr Johnson said new rules for student visas were having a negative impact.
The new rules mean higher standards of English are needed for students and they can only remain in the UK after graduating if they have a skilled job with a graduate-level salary from an accredited employer.
The London mayor said the number of Indians applying for degrees in the UK was down 9% this year and was set to fall further in 2013.
He said he had written to the home secretary Theresa May to express his concerns and to press for the government to set up a commission to look at whether the UK was losing prospective foreign undergraduates to countries with different visa requirements.
"The policy on visas is, in my view, sending the wrong signal. There are so many stipulations that we are starting to lose business to Australia, America and Canada," he said.
"The extra stipulations, such as the need to have a salary of up to a certain amount before you are allowed to stay on mean we need to be very careful that we are not doing stuff that actively deters foreign students and at the moment the policy seems to put people off."
Mr Johnson said the UK had a "strong" reputation for attracting students from around the world and the £2.5bn in fees they paid every year helped universities pay for places for UK students.
"It is a great idea to have a London that is open to that kind of business. I am saying to government 'don't do things that are going to cause unnecessary alarm and prejudice against the UK."
According to the Higher Education Statistics Agency, there were 39,090 Indian students on UK courses in 2010-11, 13% of the total non-EU student population and second only to China.
In what Mr Johnson said was an "exciting" development, the Amity University of Delhi announced on Monday that it wants to open a campus for 15,000 foreign students in London.
Mayoral sources suggested that the Greater London Authority would seek to work with the private university to establish whether any of the land it holds would be suitable for the site.
'Brightest and best'
Some MPs are worried about the impact that the government's crackdown on bogus colleges and university visa procedures is having on foreign students' perceptions of the UK as a place to study.
The government has said it still wants to attract the "brightest and the best" to come to the UK but is focused on reducing net migration levels from more than 200,000 now to the tens of thousands.
Speaking at the Conservative Party conference in September, the home secretary said the government would take on "powerful vested interests" which opposed its policy and the higher education sector could not be treated differently because of its value to the economy.
"I agree that we need to support our best colleges and universities and encourage the best students to come here," she said.
"But to say importing more and more immigrants is our best export product is nothing but the counsel of despair."
Mr Johnson and other MPs are urging ministers to remove student visa statistics from the government's overall net migration target.