UK universities are exceeding the government's challenge to recruit more overseas students, but their efforts could be thwarted if the Sars virus restricts travel.

According to figures published today by the university admissions service, Ucas, the number of overseas students applying to study in UK institutions increased by 12.2% this year. For the first time the number of Chinese students applying to UK institutions has exceeded the number of students from the Republic of Ireland, which traditionally sends the most students to the UK.

Applications from Chinese students increased by 43.3% to nearly 6,000 this year. China has overtaken Hong Kong - listed separately to China by Ucas - and Singapore in terms of the number of students it has sent in the last two years, although both still feature in the top 10, sending 2,380 and 1,397 respectively. China is at the heart of the Sars outbreak and a high number of cases have been reported in Hong Kong and Singapore.

The UK government has been pushing for the expansion of the overseas student market since coming to office in 1997. Four years ago, prime minister Tony Blair said by 2005 he wanted 25% of the global market share of higher education students. He said people who study in the UK "promote Britain around the world".

The overseas student market in Britain is worth £2bn.

Susanne Alexander, director of promotions at the British Council, which works to promote British education abroad, said the UK was on course to meet that target.

She said Ucas figures revealed the biggest increase yet, but she could not say what impact Sars might have on how many students actually take up places in the UK. She said so far the council had not had to take any additional steps, but were following advice form the government and the World Health Organisation.

She added: "Naturally we're concerned for the parents and the students who feel that their study plans may be affected, but it's far too soon to judge what the impact might be. We are looking very carefully at this situation as it develops."

Universities UK, which represents vice-chancellors, said it could not gauge the impact Sars might have on the number of overseas students who are able to take up places at UK institutions.

Michael Driscoll, the vice-chancellor of Middlesex University, which has boosted its student recruitment from Asia by 80% in the past three years and was awarded a Queen's prize in recognition of its recruitment of overseas students last week, said the advice it had received from health authorities was that students should not at present by affected. He said teaching would continue in the new term as normal, but the university would not advise its members to travel to infected areas.

"The university is taking steps to ensure that all its students and staff are aware of the symptoms of Sars, that they remain vigilant and that they know what to do if they have concerns. This advice is entirely in line with the UK health authorities," he said.

"The university will continue to monitor the situation and will act in accordance with the health authorities."