Mr Claire said that by 2025, enrollment at public universities will have fallen to 145,000, the same level as in 2023.
Private universities and non-university higher education institutions will be allowed to enroll 30,000 new international students, while vocational education and training institutions will be limited to 95,000.
Mr Claire added that the policy would also include incentives for universities to build more housing for international students.
But higher education institutions say the industry has become a “scapegoat” for housing and migration issues and that the cap would devastate the sector.
In 2022-23, international education was worth A$36.4 billion (£18.7 billion; $24.7 billion) to the Australian economy, making it Australia’s fourth-largest export that year.
The proposed cuts could cost the Australian economy $4.1 billion by 2025 and cost around 22,000 jobs, according to economic modelling commissioned earlier this year by the University of Sydney, where international students make up around half of all enrolments.
Vicky Thompson, the chief executive of the body representing Australia's most prestigious universities, described the proposed laws as “draconian” and “interventionist” and said in remarks earlier this year that they amounted to “economic devastation”.
Mr Claire acknowledged that some service providers may have to make difficult budgetary decisions, but denied that the restrictions would have a detrimental effect on the industry.
“It is absolutely, fundamentally wrong to give the impression that this is somehow undermining international education,” he said.
