In order to study the permeability of highly permeable embankment foundations with suspended cut-off walls, a series of seepage-stress coupling experiments with cut-off walls of three different heights in different axial stress states were carried out. Results show that seepage failure is more likely to occur at the bottom of cut-off walls because of high seepage velocity there, the average seepage gradient of the embankment foundation decreases with the increase of the height of cut-off walls, and the seepage gradient at the bottom of cut-off walls is always maximum along the seepage contour line. Stress states have large effects on the seepage gradient of sand gravel foundations with suspended cut-off walls. There is a parabolic relationship between critical seepage gradient of piping and axial pressure. The seepage gradient causing seepage failure at the bottom of cut-off walls increases linearly with the increase in axial pressure. Based on these results, a linear empirical formula for the seepage gradient causing seepage failure at the bottom of cut-off walls, denoted by the axial pressure, is established.