Prime minister Julia Gillard has refused to stop reforms to the 457 immigration visa system, saying that the scheme is "out of control".

Businesses have urged the government to rethink its desire to make changes to the system, with many enterprises saying that it will hurt the general economy.

Speaking at Eastern Creek in Sydney's west, Ms Gillard said that Labor inherited a dysfunctional system from the previous Howard government.

She said that the rorts had to stop and Labor will take the necessary steps to "crack down" on the issue.

The Coalition has come out against the changes, saying that only 0.7 per cent of the Australian labour force is made up of 457 visa workers, the Australian Associated Press reports.

The Labor leader conceded that there are legitimate shortages in various skills areas, but explained that she believed there are too many cases of jobs going to foreigners where locals could have been chosen.

But many have hit out against the changes, with Migration Alliance's Liana Allan explaining that the system is not out of control and the Howard government did introduce a quality 457 scheme.

She explained: "I believe that Liberal, in its quest for hope, opportunity and reward, want to give Australia the ability to compete in international markets and remain at the forefront of innovation.

"This only comes through the granting of temporary visas such as the 457, which gives the Australian economy access to introduced skills which are not readily available, in the numbers required, inside Australia."

Ms Allan explained that the current system gives Australian employers the best possible workers from overseas and puts them into skilled positions in the country.

Given that many 457 visa holders go on to receive permanent visas and then obtain their citizenship, Australians have the opportunity to take advantage of that.

Ms Allan explained that she sees the prime minister as pandering to the union movement, particularly the Construction Forestry Mining and Energy Union. She said that Ms Gillard's former links with a union heavyweight; Michael O'Connor - who also happens to be the immigration minister's brother - shows that her policy on the issue is far from impartial.

Ms Allan explained that the Department of Immigration and Citizenship's (DIAC) compliance measures are "intrusive" on businesses, and that the DIAC already has powers of investigation that it uses on a regular basis.