The number of people heading to Britain, less the number leaving, dropped significantly by 84,000 to 163,000 in the year to June, fuelled by a 17% drop in the number of foreign students arriving.
Immigration to the UK fell from 589,000 to 515,000, its lowest since 2003, official figures from the Office for National Statistics showed.
Prime Minister David Cameron and Home Secretary Theresa May have pledged to reduce net migration to below 100,000 before the next election in 2015 and have brought in a number of measures to crack down on bogus students.
Mark Harper, the Immigration Minister, said: “We are bringing immigration back under control.
“Today’s statistics show another significant fall in net migration – down almost a third since June 2010 – and the latest visa statistics indicate that this trend is set to continue.
Chosen excerpts by Job Market Monitor