London Metropolitan University is taking legal action against the government after it was banned from teaching students from outside the EU.

The university announced on Monday that it will challenge the UK Border Agency’s decision to strip its right to sponsor visas.

The institution stands to lose up to �30million a year and fears have been raised over its long-term survival.

Vice-chancellor Malcolm Gillies said: “London Met will fight this revocation, which is based on a highly flawed report by the UKBA.”

The university and staff fiercely dispute UKBA’s claim it is guilty of “serious and systemic failings” in keeping track of overseas students.

UKBA says a quarter of the university’s overseas students checked in an audit didn’t have permission to stay in the country and there was no proof they were turning up to lectures.

Cliff Snaith, secretary of the University and College Union (UCU) London Met branch, said: “The UKBA’s decision is outrageous and has no basis whatsoever in reality.”

Up to 2,600 overseas students now face deportation if they do not find other universities by December 1.

Adnan Pavel, vice-president of London Met Students’ Union, who hails from Bangladesh and has paid �30,000 in fees since 2009, said: “The government is playing with our students’ lives simply to further its political agenda. If the university or some students have broken the rules, why are they penalising all those who haven’t done anything wrong and paid so much to be here?”

He added: “Students are finding it very difficult to find other universities. Some only have one or two modules to complete and they will have to start the year again, while many universities have closed their admissions.”

Thousands have signed a petition due to be taken to the Home Office in a rally outside its headquarters as the Gazette went to press yesterday (Wednesday).

Meanwhile, Islington North MP Jeremy Corbyn raised the issue in Parliament this week, calling for current students to be allowed to complete their courses.

Earlier, he warned: “If this decision is not changed rapidly... the very existence of [London Met] will be called into question as a major part of its income relies on overseas students.”

This is the latest in a string of crises at London Met. It was fined �35million in 2009 by the Higher Education Funding Council for misrepresenting student numbers. Last year it faced criticism for slashing more than 70 per cent of courses and scrapping many departments altogether.