DAVID Cameron's "obsession with immigration" could damage Scotland's universities by limiting the number of fee-paying students coming to the UK from overseas, the Holyrood Education Secretary has warned.

In a stinging attack on the Prime Minister's keynote speech on immigration last week, Michael Russell said that "Cameron and his privileged friends" were utterly out of touch with Scotland's needs.

On Monday, the Prime Minister set out plans to curb the number of net migrants to the UK from around 160,000 a year to "tens of thousands", as well as restricting migrants' access to social housing, the NHS and welfare benefits.

He said immigration got "far too high and badly out of control" under Labour and the UK had been seen as a "soft touch".

Although Cameron said there would be "no cap on student numbers at our world-class universities", there are fears that might protect Oxbridge, but leave new universities and colleges exposed.

Scottish universities are already worried about Westminster crack-downs on immigration. Last month, principals blamed "hard-line rhetoric" and restrictions on graduates working in the UK for sharp falls in student numbers in 2011-12.

Students coming to Scotland from India, Pakistan and Nigeria fell by 25.8%, 24.9% and 14.1% respectively compared with 2010-11, though there was a 21.8% rise from China.

Russell yesterday warned that this UK policy was wrong for Scotland, where more working-age people are needed to support the growing elderly population, and suggested there could be a sharp change of direction if there was a Yes vote to independence next year.

The minister told the Sunday Herald: "Scotland has world-class universities. They are at their best when they are cosmopolitan places of learning, attracting staff from around the world that enrich the experience of home and international students alike."

Cameron's speech was interpreted as an appeal to wavering Tory voters drawn to Ukip. But despite being billed as a major event by Downing Street, the speech later appeared to unravel, with officials admitting that, rather than being "spongers", non-UK nationals were more likely to work than UK nationals, with only 7% claiming benefit compared to 17% of adults from the UK.

It also emerged that many of Cameron's benefit curbs were simply standard EU rules.

The speech also seemed to irk the LibDem side of the Coalition, with Business Secretary Vince Cable saying Britain needed to "bang the drum" in India and China to draw more students to the UK.

Russell added: "What has become obvious is that the UK Government's obsession with immigration has little to do with the needs of Scottish students, Scottish universities or the Scottish economy. It is driven by the politics of the right and the Tories' fear of Ukip.

"It is little wonder that people have no faith in Cameron and his privileged friends to understand the needs of Scotland. They are out of touch with ordinary people and out of touch with Scotland."

Alex Salmond and his ministers have had a series of arguments with the Westminster Coalition over immigration, with the SNP Government arguing that Scotland should be more open to migrants, and be exempted from some of the restrictions that are applied south of the Border.