Net migration to the UK fell by a third in the year ending June 2012, compared with the previous 12 months, the latest immigration figures show.
The Office for National Statistics said 163,000 more people came to live in the UK for 12 months or more than left, compared with 247,000 the year before.
The ONS said this was driven by a drop in immigration, and study remained the most common reason to come to the UK.
Ministers want to cut net migration to the "tens of thousands" by 2015.
'Tough reforms'The ONS said the figure of 515,000 people who immigrated to the UK in the year ending June 2012 was "significantly lower" than the 589,000 who came the previous year.
Its figures also showed:
Immigration is pushed and pulled by a myriad of factors, from family life to global economics. But, ultimately, the politics of migration in the UK, whether you agree or not, comes down to the numbers.
And so ministers will point to these figures as evidence that their policies of tackling immigration abuse and some categories of students are biting. They're certainly closer to their net migration target than they had expected to be.
However, critics will ask whether part of the fall relates to whether the UK remains attractive.
The UK cannot turn away EU workers - but there's been a drop in the arrival of those industrious Eastern Europeans whom business bosses love. Statisticians think some of those people may now be heading to Germany instead.
Secondly, there's been a slight rise in emigration as more Britons and people from Commonwealth nations find jobs abroad.
- A fall in the number of migrants from New Commonwealth countries - 117,000 compared with 168,000 the previous year - and those from EU accession countries, including Poland - 62,000 compared with 86,000 the previous year
- Some 352,000 emigrants left the UK in the year ending June 2012, "similar" to the estimate of 342,000 in the year to June 2011
- Excluding visitor and transit visas, the number of visas issued fell 10% to 507,701 in the year ending December 2012, the lowest 12-monthly total recorded using comparable data available from 2005
- In the year to December 2012, there were 209,804 visas issued for the purpose of study (excluding student visitors), a fall of 20% compared with the previous 12 months
- Sponsored visa applications fell 22%, with a 3% increase for the university sector and falls of 62% for further education, 69% for English language schools and 14% for independent schools
Immigration minister Mark Harper said: "Our tough reforms are having an impact in all the right places - we have tightened the routes where abuse was rife and overall numbers are down as a result.
"We will continue to work hard to bring net migration down from the hundreds of thousands to the tens of thousands by the end of this Parliament and to create a selective immigration system that works in our national interest."
'Drastic cuts'IPPR associate director Sarah Mulley said: "Because most students stay in the UK only for a short time, reduced immigration now will mean reduced emigration in the future, which by 2015 could partially reverse the falls we are seeing today.
"This also means that more drastic cuts to student numbers would be needed to make further progress towards the government's target.
"Given that the government still need to reduce net migration by 63,000 in order to meet their target, it is clear that this cannot be achieved in the medium term without radical changes that go far beyond the student visa regime."
Pressure group Migration Watch UK welcomed the overall drop in net migration. Its chairman Andrew Green said it was "evidence that the government's policies are starting to take effect".
"The universities have been wrong to claim that their sector was suffering from the restrictions designed to tackle bogus college students," he added.
The previous set of figures - to the end of March 2012 - showed net migration was 183,000.
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