The Federal Government has announced changes to conditions for foreign workers on 457 visas.

Employers will be required to demonstrate there is a genuine skills shortage, and they will not be able to send foreign workers to an area where local skilled workers are available.

The Government will also close a loophole allowing foreign workers to be paid less than local workers.

Immigration Minister Brendan O'Connor says the changes will reduce the number of 457 visa applications, which have outstripped national employment growth.

"We have seen too many examples of abuse across the nation," he said.

"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.

"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."

Speaking to ABC News 24, Liberal Senator Arthur Sinodinos said the Coalition would consider the plan in full before deciding whether to back it.

But he said it was possible to make conditions for a 457 visa too tough.