Canada for the first time is planning to curb the number of temporary foreign workers it welcomes, officials announced Thursday, after years of lofty immigration levels.

Ottawa is proposing to reduce the number of temporary residents to five percent of the population over the next three years, down from the current 6.2 percent (2.5 million people).

That target will be firmed up after consultations with Canada's provinces, some of which have been pushing back on large migrant inflows amid a housing crunch and soaring demands for services.

Restrictions on temporary foreign worker permits will start on May 1.

This follows a recently announced cap on new permits for international students and visa requirements for some Mexican travellers.

"Canada has seen a sharp increase in the volume of temporary residents in recent years, from a rise of international students to more foreign workers filling job vacancies to those fleeing wars and natural disasters," Immigration Minister Marc Miller told a news conference.

However, Canada's labour market is now much tighter, with its population growth, fueled by massive immigration, outpacing job creation.

According to government data, job vacancies fell 3.6 percent to 678,500 in the last three months of 2023, marking the sixth straight quarterly decline from a record high of 983,600 reached in the second quarter of 2022.

"Changes are needed to make the system more efficient and more sustainable," Miller said.

Employment Minister Randy Boissonnault urged employers to consider hiring refugees before seeking to bring in temporary foreign workers.

He said businesses that are currently allowed to have temporary foreign workers make up to 30 percent of their workforce will see that proportion drop to 20 percent, except in the health care and construction sectors.

Canada's immigration department, meanwhile, has been ordered by Miller to conduct a review of existing programs that bring in temporary labourers to better align them with labour needs and weed out abuses.