Immigration minister Damian Green said London Metropolitan University was "very, very deficient" sponsor because more than a quarter of students sampled were studying there when they did not have permission to stay in the country.
A "significant proportion" of students did not have a good standard of English and there was no proof that half of those sampled were turning up to lectures, he added.
"Any one of those breaches would be serious. We found all three of those breaches at London Metropolitan.
"I'm not chucking anyone out, we have actually set up a task force to make sure genuine students can stay in the country" he said.
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David Cameron said the Met proved it can "do more with less" and declined to criticise the Mayor of London for his water cannon spend.
A group of disabled activists threw toys and balls at him as he entered the conference.
A wet start to the week and the unsettled weather is set to continue over the next few days.