Employers wanting to take on foreign workers on 457 visas will have to undertake labour market testing under legislative changes to the controversial scheme.
As well, Fair Work inspectors will be given an expanded monitoring role, including many more given powers under the Migration Act.
Introducing long-awaited legislation, Immigration Minister Brendan O'Connor said the government believed Australian citizens and permanent residents deserved first crack at local jobs on local projects.
Use of 457 visas has been growing strongly, rising from 68,400 in June 2010 to 106,680 at the end of May this year, a 56 per cent increase.
Many growing industries, including the resources, healthcare and information technology accounted for more than half of all 457 visas in 2011-12.
But strong growth was recorded in accommodation, food service and retail sectors where employment was falling.
"It concerns the government that at a time when the labour market has been flattening and some sectors and regions have experienced layoffs and increased unemployment, the subclass 457 program has continued to grow," Mr O'Connor told parliament.
"Coupled with this strong growth is a tendency for some employers to source foreign labour through the subclass 457 program without regard to the Australian domestic labour force."
Mr O'Connor said the government was concerned some employers were resorting to overseas workers rather than investing in local training and recruitment.
There was also evidence that some were paying foreign workers below market rates, failing to undertake training and using visas for fraudulent immigration of family and friends.
Mr O'Connor says there were now 32 inspectors with powers to monitor sponsorship obligations but that will be expanded to more than 300.
Debate on the Migration Amendment (Temporary Sponsored Visas) Bill 2013 was adjourned.
Crossbench MP Bob Katter said he would support the bill, but would push for tighter limits on 457 visas through a private member's bill.
"As far as we are concerned, we will be flying in virtually nobody," Mr Katter told reporters.
"Our position has been quite unequivocal right from the start.
"Of course, any move in that direction would be strongly supported by us."
Mr Katter said the current system undermined pay and conditions and prevented Australians from getting work.
