Skilled migrants will have their visa applications accelerated if they move to regional Australia under a $19.4 million plan.
Immigration Minister David Coleman on Friday announced the initiative as state and territory treasurers met in Canberra to discuss population growth and congestion issues.
The money will be used over four years and Department of Home Affairs officials will travel to regional areas to help local businesses get more skilled workers.
Under the plan, there will be priority processing for visas sponsored by employers in regional areas, as well as agreements where local councils are able to recruit workers from overseas.
"Our officers will be on the ground to discuss regional migration opportunities with regional employers and communities, and also to hear first hand the local labour issues they face," Mr Coleman said.
Prime Minister Scott Morrison has previously flagged migrants could be asked to spend five years in a regional area if they want permanent residency.
Mr Morrison has also flagged cuts to Australia's annual migration intake to ease congestion in major cities.
Treasurer Josh Frydenberg met with the treasurers in Canberra on Friday morning to discuss how the nation can share responsibility for population change, with a particular focus on easing congestion with infrastructure.
"Two-thirds of new immigrants are going to our capital cities, in particular Sydney, Melbourne and in southeast Queensland," Mr Frydenberg said.
"This is creating pressures on infrastructure, not only on our roads but also on our public transport, creating pressures on health, on education and other essential services."
"We need to send people where the jobs are and we need to cooperate across state and territories."
Australia's permanent migration number is capped at 190,000 people each year but has only reached about 160,000 over the past few years, Mr Frydenberg added.
But the Treasurer was coy on whether he thinks the migration cap should be lowered.
"Well let's look year by year as to what are the needs across the community, but certainly there are population pressures that are contributing to congestion in our major cities," he said.
Mr Frydenberg conceded Australia hasn't planned well for the future, as the population reached 25 million people earlier than expected.
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