The Government announced 31,000 skilled migrants will be added to the 2008-09 Migration Program. The increase follows on from a one-off allocation of 6000 extra skilled migration places announced in February.

Overall, permanent skilled migration makes up 133,500 places in the program which now totals 190,300.

"This record increase in the number of places in the permanent skilled migration program, since the introduction of managed migration in 1947, will help ease Australia's skills shortage and help fight inflation," Minister for Immigration and Citizenship Senator Chris Evans said.

In addition, the family stream will be increased by 6500 places to 56,500, and includes a boost of 4000 places to the parent visas.

The increase in the program from 2008-09 is estimated to cost an additional $1.4 billion over four years for settlement services and ongoing core government services such as health, education and employment services.

The additional cost to the budget will be offset by revenues from income tax, excise duty, GST and charges paid by the new migrants estimated at around $2.9 billion over four years.

Meantime, the Government has committed $19.6 million to improve processing and compliance of the temporary skilled migration program which includes the uncapped 457 visa scheme.

"This is the first stage of a series of reforms aimed at restoring integrity and public confidence in the 457 program," Evans said.

The use of 457 visas to employ temporary skilled migrant workers has grown rapidly in recent years.

A total of 39,500 subclass 457 visas were granted in 2003-04 compared to 49,700 in just the first half of 2007-08.

A working party led by Evans and the Deputy Prime Minister Julia Gillard as well as the Treasurer and Minister for Trade will develop a longer-term reform package to be considered as part of the 2009-10 budget.