The government has set up a special £2 million fund to compensate students for losing advance rent and deposits as a result of London Metropolitan University losing a licence to sponsor students from outside Europe.
Universities Minister David Willetts is giving the students extra financial help to continue their studies.
Besides compensation for accommodation, the government will also pay for any fee for a repeat visa application and other discretionary payments like housing and travel costs.
The minister says the fund responds to concerns raised by the task force set up by the Department for Business, Innovation & Skills (BIS) to support London Met in helping genuine students to find another institution at which they can continue their studies in the UK.
Universities Minister David Willetts said: "It is important that genuine students who are affected through no fault of their own are given as much help as possible to continue their studies in the UK.
"This fund will help offset the extra costs students face in transferring to another institution and also help to put students' minds at ease at what must be a very stressful and unsettling time."
Around 2,000 of students have been left without a course after the UK Border Agency revoked London Metro’s licence over alleged visa irregularities.
The university has launched a legal challenge and hopes to win a judicial review of the decision.
The university's status for sponsoring international students was suspended while the UKBA examined alleged failings.
Of 101 sample cases, 26 students studying between December and May had no leave to stay in the UK, claimed UKBA.
Poor monitoring meant the university had no proof students were attending lectures in 142 of 250 sampled records.
In 20 of 50 files checked since May for evidence of English language testing and academic qualifications showed poor assessment, where documents were either not verified or not held.
London Metro’s vice chancellor Professor Malcolm Gillies said: "I would go so far as to say that UKBA has been rewriting its own guidelines on this issue and this is something which should cause concern to all universities in the UK."