Racist attacks on foreign students in Ireland are threatening a rapidly expanding business worth at least €450 million (?5 million) a year.

"Ten years ago overseas students used to say it's much better here than in the UK - now they don't say it any more," according to Wendy Cox, chief executive of the Irish Council for International Students.

She said that the murder of a Chinese student Zhao Liu Tao - thought to be the first racially motivated fatal attack in the republic - could have serious consequences. There are an estimated 30,000 Chinese students in Ireland.

Dr Cox said that international students generally felt safe on campus but were subject to increasing racist abuse on the streets, in pubs and clubs. While many were very positive about their experiences, she said that "further steps have to be taken to make our streets safer".

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Dr Cox said that the situation had deteriorated in the four years since the council had published its study The Irish are Friendly, but ..., particularly for Asian and African students.

The numbers of students arriving in Ireland have increased dramatically. But as the economy slows and global recession looms, fears of a rise in racism grow.

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Eimear Nic An Bhaird, student union welfare officer at Trinity College Dublin, said the union deplored the recent murder. "We call upon the government to act with all appropriate haste before more students suffer the consequences of racial intolerance."