Around 40,000 Chinese students are now scrambling to secure a visa and accommodation before the start of semester one in February.
The change in policy is expected to provide a major boost to Australia's economy as education was of the country's largest exports pre-pandemic worth around 40-billion dollars.
Chinese students made up about a third of all international students and, according to the Grattan Institute, contributed more than 11-billion dollars to the economy including accommodation and other living expenses.
The decision has sparked some backlash from Chinese students with some complaining on social media about the lack of warning from the government.
Many posted online about their fears of being unable to secure a house and visa in time for the start of the semester.
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