Under the Tier 1 (Post-study work) route, Indian and other non-EU students were able to take up work for two years here after the completion of their university courses.
This route will be closed from Friday, the Home Office has announced.
The facility was popular among self-financing Indian students who sought to recover some of the expenses of studying here by working for two years.
The facility also enabled them to gain work experience in the UK that was seen to aid career prospects in India.
There are already reports of falling numbers of Indian students applying for university courses starting from September 2012.
From tomorrow, following the closure of the facility, international students will be able to apply for leave to remain in the UK under other immigration routes if they meet the criteria, but most such students are unlikely to meet the higher income level and other criteria.
International students are estimated to contribute over 14 billion pounds annually to the UK economy.
The closure of the post-study route was opposed by Universities UK and the British Council, given the possibility that the measure would reduce Britain's attraction as a destination for students from India and other non-EU countries.
Prime Minister David Cameron had promised to crack down on immigration at last year's Conservative party conference.
In February, the British Council had called for an "urgent review" of the changes to the student visa system, particularly the closure of the popular post-study work visa from April this year.
The Council, which is responsible for promoting British education overseas, presented a detailed report to the government on the likely impact the recent student visa changes will have, and compared the experiences of Australia and US in this regard.
In a report titled 'Impact of Visa Changes on Student Mobility and Outlook for the UK', the British Council said: "Students from certain countries who mainly study postgraduate courses in the UK --such as India, Pakistan and others --will be affected by the removal of the post-study work visa...The sooner this situation is addressed, the more contained the damage of bad publicity overseas will be."
The Home Office also announced that the annual limit for skilled Indian and other non-EU migrants with job offers in the UK would remain at 20,700 for the next two years until April 2014.
During the first year of its operation ending this month, the limit has been undersubscribed by about 50 per cent.
Immigration minister Damian Green said: "The government has been clear that the UK is open for business and our limit has been designed with the industry's needs in mind.
We believe there is no incompatibility between economic growth and controlling migration --our reformed, more selective immigration system can achieve both."