"This is intended to reinforce confidence in the quality of the Australian international education sector," Julia Gillard said.
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"While the vast majority of education providers are delivering quality education, unfortunately the sector has been tarnished by the activities of a few," she said in a statement.
Under the new rules, colleges will have to prove that education is their principal purpose and that they are able to deliver courses of a high standard.
Colleges will also be more accountable for the actions of the agents they use to recruit students.
Education is Australia's third-largest export earner -- worth more than 12 billion US dollars annually -- with tens of thousands of students streaming in each year from China and India.
But some of the colleges that have sprung up t