Universities would be forced to cap the number of international students they accept or risk being barred from taking on more enrolments under laws introduced to federal parliament.
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The limits will form part of a crackdown on international education providers as student visa numbers return to pre-pandemic levels.
Changes introduced to the House of Representatives on Thursday will set a maximum number of international students able to be enrolled each year.
Universities would have to build new student accommodation in order for the cap to be lifted.
Similar limits for vocational education courses would also be set by the federal skills minister based on industry demand.
If education providers exceed the cap, they would be barred from enrolling any more international students for that year.
The higher education sector had flagged a need for improvement in how student visas were issued according to the risk ratings of institutions.
Education Minister Jason Clare said the changes were about making the sector more sustainable in the future.
"The students are now back, but so are the shonks. The shonks and crooks are looking to take advantage of students and make a quick buck at the expense of this critical national asset," Mr Clare told parliament on Thursday.
"Unscrupulous actors ... are a threat to our good name as a place where the best and brightest from around the world can come and get the best education in the world."
New education providers looking to offer courses to international students would have to first offer them to domestic students before pupils from overseas are allowed to enrol.
The laws would also cancel dormant educational provider registrations to stop them from being picked up by dodgy providers as a way to enter the education market.
Changes would also ban commissions for education agents over student transfers between institutions, in a way to remove incentives for dodgy operators.
Mr Clare said institutions would need to prove their track record in the industry.
"One thing that the framework makes clear is that international education is not a one-way street," he said.
"We have to ensure that we manage the international education industry in a way that delivers the greatest benefit to Australia whilst maintaining its social licence from the Australian people."
Australian Associated Press
