London Metropolitan University has been granted permission to apply for a judicial review at the High Court after its licence to teach overseas students was revoked by the UK Border Agency.
Mr Justice Irwin refused an injunction suspending the revocation of the university's sponsorship licence pending the outcome of the judicial review but made temporary orders protecting the position of some students.
London Metropolitan University had asked the High Court to step into the dispute about visas for overseas students.
It had wantd Mr Justice Irwin to grant an order that the UK Border Agency's (UKBA) decision suspending and revoking its sponsorship licence should itself be suspended pending the outcome of a judicial review.
Earlier its counsel, Richard Gordon QC, said there was a strong prima facie case that the UKBA's decision was unlawful and the balance of convenience favoured the granting of a temporary injunction - given the impact of the decision on the university and its students.
The university's highly trusted status (HTS) for sponsoring international students was suspended while the UKBA examined alleged failings.
Of 101 sample cases, 26 students were studying between last December and May even though they had no leave to remain in the UK, UKBA figures showed.
A lack of required monitoring meant there was no proof that students were turning up to lectures in 142 of 250 (57%) sampled records.
Twenty of 50 files checked since May for evidence of mandatory English language testing and academic qualifications showed poor assessment, where documents were either not verified or not held.
More than 2,000 overseas non-European Union (EU) students left in limbo will get three months to find an alternative course, officials have said.
Genuine students have 60 days to make a new application or to arrange to leave the UK, but the countdown starts when UKBA writes to them and no letters will be sent out until October 1.