The Office of National Statistics said 515,000 people migrated to Britain, down from 589,000 in the previous year, The Daily Telegraph reported. Net migration fell to 163,000, down by 84,000.
One of the main drivers of the decline was a 17 percent drop in the number of people entering Britain on student visas, the ONS said. That followed a government crackdown on schools that allegedly function mainly as fronts for would-be immigrants.
Immigration Minister Mark Harper said the policy has worked.
"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," he said. "But sponsored student visa applications for our world-class university sector are up and the numbers of skilled people being sponsored by U.K. employers in sectors such as IT and science have also increased."
The ONS also reported a drop in immigration from Poland and other new members of the European Union. Experts suggested one reason might be lifting of immigration restrictions in Germany and some other EU countries.
Prime Minister David Cameron hopes for further cuts in net immigration. The figures were announced as his Conservative Party came in third in the Eastleigh by-election with the euroskeptic and anti-immigration United Kingdom Independence Party in second place.