More than 10,000 foreign students are now enrolled in secondary schools and they contribute an estimated Pounds 150 million to the Australian economy through fees and payments for living expenses.

But the great majority of parents of overseas students choose to send their children to non-government schools, mainly the top so-called independent schools which offer boarding facilities.

With conservative parties now in power in most states, however, government schools are being encouraged to generate much more of their own income, including recruiting foreign students. The schools keep 75 per cent of the fees while the remainder is used for general education spending.

In a pilot programme in Victoria this year, 35 state schools have begun to enrol overseas students. State education minister Phil Gude told principals the number of foreign students could increase to 10,000 over the next three years, generating up to Pounds 40m in fees.

Fees would range from Pounds 2,225 for pupils in primary schools to Pounds 4,000 for students undertaking their final two years of secondary education. These are markedly lower than the fees charged by many private schools.

Mr Gude said his department of education would soon begin recruiting students in Hong Kong, Malaysia, Japan and Indonesia.

But the AEU condemned the move, claiming an influx of foreign students would reduce opportunities for young Australians to gain access to local schools and turn schools into businesses.

A union spokesman said government schools were meant to serve their local communities. Now that the profit motive was becoming dominant, schools would be tempted to accept foreigners over locals because they could earn more from fees.