Liam Fox has suggested he agrees with Cabinet colleagues who want Theresa May to exclude foreign students from the Government's target to get net migration down to the tens of thousands.
The International Trade Secretary said he has made his own views "clear" to the Home Secretary, suggesting he was on the same side of the debate as Foreign Secretary Boris Johnson and Chancellor Philip Hammond.
Mr Johnson's call for international students to be left out of the net migration figures as they are a "massive benefit" to the UK was rejected by the Prime Minister in December.
Mr Hammond has also indicated that he could be in favour of removing students from the target, suggesting in October that he did not believe people's main concerns around immigration were about students
Dr Fox told the House of Lords International Relations Committee: "It's an ongoing argument inside Government and I've made my own views on that clear in private to the Home Secretary.
"I think there is a value for those who come and study in the United Kingdom.
"I 100% accept the point that they will be in many cases imbued by the values that they experience while they are here, many of them will go on to establish long-term relationships with the United Kingdom, understanding our institutions."
Dr Fox said there was also an opportunity for universities to generate cash and promote British values by setting up satellite campuses abroad.
"But I do think we should not underestimate the value of us actually exporting some of our capabilities, not least because those who are able to come to the United Kingdom are also those who are best off and our ability to widen the appeal and the reach of both our educational standards and the values that go with them could be accentuated, I think, by having further investment in country," he said.
"It is one of the sectors in this country that shows the most appetite for being willing to do that and I think offers us huge opportunities to continue with that. I don't see it as being one or the other, I see them as very complementary."
It comes after peers on Monday inflicted a crushing defeat on the Government over the issue.
A cross-party coalition in the Lords voted by a majority of 94 to end the widely criticised policy of including them in the Government's target.
Eight Tory rebels backed the winning amendment, including former universities minister Lord Willetts.