The Australian Migrants Council has urged caution against a strong push towards newcomers moving into regional areas, believing it could hamper economic growth.
Immigration Minister David Coleman says he is looking "very closely" to provide incentives and simplify the visa process so that more immigrants move out of major cities.
Prime Minister Scott Morrison said last week plans to slow down the entry of some temporary migrants and encourage newcomers to establish regionally.
Compliance must be there for visas: Minister
Movements come as major cities, Sydney and Melbourne feel the tension of congestion and population escalation.
Coleman says giving immigrants good reasons to move to regional areas and ensuring they continue to live where they said they would be is key.
"I do not want to go into details about particular visas and so on … but what I would say is that it's about creating the right structure," he told Sky News on Sunday.
"So, the right incentives, the right reasons for immigrants to choose those regional areas."
"It's also about ensuring that this is done, obviously, if people get a visa that has to be located in a regional area, then compliance must be present for that to happen."
Separate the infrastructure problems of the city from migration: Migration Council
The executive director of Migration Council Australia, Carla Wilshire, said the evidence shows that immigrants who settle in regional areas do well.
However, Ms. Wilshire said that many immigrants had specialized skills that were better used in urban areas.
About 87 percent of skilled migrants move to Melbourne or Sydney.
"Migration is immensely important for Australia's economic future and we must be careful not to throw the baby with bath water," Ms. Wilshire told AAP.
"A migration program that addresses the needs of regional Australia does not solve basic infrastructure problems.
"If we are going to continue to grow and be competitive, we must invest in infrastructure in our cities."
The minister says there are several regions that have been asking for more immigrants, including South Australia, Goldfields in Western Australia and Victoria's Warrnambool.