PM denies being pressured into the move - which brings in criminal background checks and language standards - by the far-right.
Australia's Prime Minister said "Australian workers must have priority for Australian jobs" as he announced that a temporary work visa popular with foreigners is to be abolished.
In a "major announcement" on Facebook, Malcolm Turnbull said: "We're putting jobs first; we're putting Australians first."
The visa affected, the 457, was intended to attract more skilled workers to Australia and allows its holders to bring family members with them on a 457 secondary visa.
But there are allegations it has been used by employers to import cheap labour, rather than to attract genuinely needed skills.
Its replacement will include a criminal background check, English language standards will be stricter, and the list of occupations that qualify will be sharply reduced.
Rejecting the suggestion that the policy revamp had been made in response to a demand for stricter immigration policies from far-right parties, Mr Turnbull, who has been facing poor approval ratings, said: "We are an immigration nation, but the fact remains - Australian workers must have priority for Australian jobs."
During a news conference in Canberra, Mr Turnbull told reporters: "We are bringing the 457 visa class to an end. It's lost its credibility."
He said the new policy was "focused relentlessly on the national interest and in ensuring that temporary migration visas are not a passport for foreigners to take up jobs that could and should be filled by Australians".
The 457 visa, which runs for up to four years, is currently used by 95,000 foreign workers. Those already on it will not be affected.
Australia's One Nation Party says on its website that it "believes in balanced, zero net immigration".
Its leader Pauline Hanson tweeted: "The government will deny their tough talk on immigration and plan to ban 457 visas is because of One Nation but we all know the truth!"