The Australian government has rejected 20,000 migrant applications as part of a major overhaul of its immigration policy.

Chris Evans, the immigration minister, said on Monday that the reforms would give priority to migrants with higher skills.

He said that about 20,000 overseas applicants would have their fees refunded at a cost of $12m, while new rules would require better English skills and target the "best and brightest".

"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," Evans said on Australian radio.

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

College applications

The new measures are likely to weigh on Australia's large overseas education sector, which successfully targeted Asian students to become the country's fourth largest earner of foreign currency.

The number of foreign students enrolled in Australian colleges has dramatically increased since 2001, when the government changed migration rules to allow them to apply for residency while studying.

But Evans said that skilled workers would now need a job offer as well as qualifications before they can gain permanent residency.

In recent years, the ecucation sector has been hit by widespread allegations of shoddy practice and visa scams by migration agents and several institutions have subsequently been closed down.

Australia attracted some 117,000 Indian students in the year to October, about 19 per cent of foreign enrolments.

Hundreds of Indians have been robbed and assaulted in Australia over the past 18 months, prompting allegations of racism.