The programme known as 457 visa allows business to employ foreign workers for a period up to four years in skilled jobs where there is a shortage of Australian workers.
"We are an immigration nation, but the fact remains: Australian workers must have priority for Australian jobs, so we are abolishing the 457 visa, the visa that brings temporary foreign workers into our country," said Prime Minister Malcolm Turnbull.
The majority of the visa holders were from India followed by the UK and China.
"We will no longer allow 457 visa to be passports to jobs that could and should go to Australians," he said.
He said Australia will adopt a new 'Australians first' approach to skilled migration.
As of September 30, there were 95,757 workers in Australia on primary 457 visa programme, ABC reported.
Turnbull's announcement comes days after he visited India where a range of issues, including national security, counter-terrorism, education, and energy, were discussed and six agreements were signed.
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