"We are putting jobs first, we are putting Australians first.we are an immigration nation but the fact remains that Australian workers must have priority for Australian jobs", Australian Prime Minister Malcolm Turnbull said on Facebook.
The scheme will be replaced by a new temporary visa specifically created to recruit "the best and brightest", with tougher English language tests and labour market testing requirements.
And One Nation leader Pauline Hanson took some credit for the policy change.
The 457 visa program allows business to employ foreign workers for a period up to four years in skilled jobs where there is a shortage of Australian workers.
The new visa would be "specifically created to recruit the best and the brightest in the national interest", he said.
"We will no longer allow 457 visas to be passports to jobs that could and should go to Australians".
The Turnbull government will abolish 457 visas and replace them with a new scheme.
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"We are bringing the 457 visa class to an end".
More than 1.28 million 457 temporary work visas have been issued since the 1997 financial year.
The government will also establish a new training fund, Turnbull added.
The 457 visa, now used by about 95,000 foreign workers, will be replaced by a new temporary visa and the list of occupations that qualify for a visa will be reduced from more than 200.
The 457 visa is now held by around 95,000 skills workers in Australia.
In his statement in December, Minister Dutton said the 457 Visa program had grown from 68,000 primary visa holders in 2010 to more than 110,000 today. The Government will also be looking to strengthen requirements for employers to contribute to training Australian workers.
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