Employers will have to prove there is a legitimate skill shortage before being able to take on a foreign employee under the much-maligned 457 Visa scheme.

Under the proposed changes, employers will not be able to deploy foreign workers to an area where local skilled workers are available.

Federal Immigration Minister, Brendan O’Connor, said the changes will be made to reduce the number of 457 visa applications, which have outstripped national employment growth as well as cracking down on misuse of the scheme.

"We have seen situations where people's jobs have been dressed up to be so-called skilled jobs, but in fact when they come here, they are working in unskilled areas,” Mr O’Connor told the ABC.

"We have seen situations where people have come out on this visa [who] are friends or family of the sponsors, and that is not the way in which those people should come here.

"They have perfectly good streams of migration to apply and this stream should not be used in that manner."

Industry representatives have wasted little time in expressing their dissatisfaction with the proposed changes, with the Australian Industry Group (AI Group) urging the program to be relaxed, rather than tightened.

"The 457 program is an economic shock absorber and it should have the flexibility to meet rises and falls in demand. Employers will always prefer to hire locally but we still don't have the right skills in the right places,” AI Group’s CEO Innes Willox said.