London Metropolitan University has had its right to sponsor students from outside the EU revoked, and will no longer be allowed to authorise visas.
Ministers have concerns over issues such as whether or not students are working instead of attending courses.
A task force has been set up to help students affected by the decision.
The UK Border Agency said it had "failed to address serious and systemic failings" identified six months ago.
As well as stopping the university, which has 30,000 students in total, from accepting new applications, losing the licence could also affect thousands of existing overseas students at the university.
The National Union of Students (NUS) said it could mean more than 2,000 students being deported within 60 days unless they found another sponsor.
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