Australia will dump 20,000 low-skilled migrant applications to re-focus its immigration intake on high-skilled jobs critical to the economy and help meet growing Chinese resource demand, the government said on Monday.

The move was welcomed by Australia's mining sector, where major firms like BHP Billiton and Rio Tinto have been expanding to meet China's growing demand for resources, but is struggling with a shortage of skilled workers.

'We need the people on the job now and the demand going forward will be even greater as these projects get off the ground,' Australian Mines and Metals Association Chief Executive Steve Knott told Australian radio.

But the switch will be a blow to the Australia's overseas student education sector, the country's third largest export earner worth $13 billion. The sector is reeling from bad-publicity over recent attacks on Indian students in Sydney and Melbourne.

Many overseas students from Asia seek residency in Australia after completing vocational courses at private colleges, usually in low-skill careers such as hairdressing and catering.

Education experts have been calling on Australia to overhaul its foreign student sector after reports of fraud and that students were the system purely to gain residency in Australia.

'We had tens of thousands of students studying cookery and accounting and hairdressing because that was on the list and that got them through to permanent residency,' Immigration Minister Chris Evans told Australian radio on Monday.

'We want to make sure we're getting the high-end applicants.'

Evans said the immigration intake would focus on health workers, including more doctors and nurses, as well as engineering and mining.

Australia's mining sector, which includes Rio Tinto and BHP Billiton, said tens of thousands of skilled workers would be needed to meet the demands of new projects, such as the Chevron Corp led $39 billion Gorgon liquified natural gas (LNG) project.

'The boom in the resources sector, particularly in the north west of Western Australia, has been quite strong so we welcome the decision that has been made,' Steve Knott, head of the Australian Mines and Metals Association, told local radio.

'We need the people on the job now and the demand going forward will be even greater as these projects get off the ground,' said Knott.

Australia's changes echoes a similar tightening in the UK, where tougher visa rules have been announced to stop people entering on student visas and taking short courses, then opting to stay in the country.

Evans said Australia's government would abolish the current list of skills in demand, which contains 106 occupations, and review a points test used to assess migrants.

Last year 170,000 people applied to live and work permanently in Australia as skilled migrants, but there were just 108,100 places available, he said.

All lower skilled applications lodged before September 1, 2007, when English language skills and work experience requirements were easier, would have their applications withdrawn and application fees worth A$14 million ($12.15 million) refunded, Evans said. – Reuters