Overseas students staying in the capital were being required to register at a single office in south-east London within seven days of their arrival in the UK.
It had resulted in hundreds of students queuing overnight outside the Overseas Visitors Records Office, with reports that students arriving after 6.30am were being turned away.
The scenes led Craig Calhoun, director of the London School of Economics and Political Science, and Sir Rick Trainor, principal of King's College London, to write a letter to Prime Minister David Cameron saying international students were facing "unacceptable and humiliating" difficulties.
However, as of 8 October, international students now have two options. They can either visit the office as before, where they will be handed a pre-stamped form to be returned by the end of the year. Alternatively, universities will be able to co-ordinate the process and return forms on behalf of their students.
Nicola Dandridge, chief executive of Universities UK, said the decision meant that international students would no longer have to queue through the night.
"Universities UK made it clear to ministers that this situation was entirely unacceptable. We want to welcome international students here and help them settle in. The welfare of students is our first priority and suitable processes must now be put in place so this situation does not occur again," she said.