Speaking from the White House on Wednesday, Bush said it was fair to allow foreign workers to take up jobs that US citizens do not want.
Even prospective workers abroad with a job lined up could be permitted to work in the United States for three years.
However Bush repeated his opposition to a blanket amnesty for the estimated eight to 12 million illegal immigrants thought to live in the United States.
The president, whose initiatives will require congressional approval, also said he would work with lawmakers to increase the number of permanent resident permits issued annually.
Unlikely to succeed
But analysts said it was doubtful the blueprint could gain congressional approval in this election year.
"I don't think it's serious … these proposals don't go far enough for most Democrats and they go too far for around 70 to 100 Republicans in the House of Representatives," said Steven Camarota, research director at the Centre for Immigration Studies.
"Republican leaders in Congress won't want to bring up this issue, especially this year, because it divides them. Unless Bush twists their arms hard, this is going nowhere."
Opponents of making concessions to immigrants said Bush was in fact proposing an amnesty for people who entered the United States illegally – despite his claim to the contrary.
"This clearly is an amnesty. It provides not only amnesty but a reward for people who committed a felony by coming here illegally," said Elton Gallegly, a California Republican in the House of Representatives.
Reasons for policy change
The proposal seemed calculated to win Bush Hispanic support ahead of the November presidential election while pleasing employers looking for workers to fill mainly manual, agricultural or low paid service jobs.
Legal and illegal immigration to the United States, already at record levels in the 1990s, accelerated further after 2000 despite the economic slowdown, according to US Census data.
"This makes no sense except political sense. It reeks of bad policy but screams of politics"
assistant director of the Federation for American Immigration Reform
From 2000 to 2002, net immigration to the United States averaged around 1.4 million per year, about half a million of whom entered or stayed in the country illegally.
Bush, who won around 35% of the Hispanic vote in 2000, would like to raise that proportion to 40% or higher this year. Even if he does nothing to push the proposals, the President will be able to incorporate them into his campaign message aimed at Hispanics.
"This makes no sense except political sense. It reeks of bad policy but screams of politics," said David Ray, assistant director of the Federation for American Immigration Reform (FAIR), a group campaigning for sharply reduced levels of immigration.
FAIR argued that the plan undermined homeland security, granted an amnesty for law-breakers, established a back door immigration program and threatened the jobs and wages of American workers.
On the other side of the debate, immigration backers were disappointed that the plan offered no clear path for illegal immigrants to become citizens.
"The initial proposal falls short in helping newcomers become fully integrated into our society, but we look forward to working with the administration and Congress to shape the final legislation," said Leonard Glickman, president of the Hebrew Immigrant Aid Society, the country's oldest migration organisation.