"The change will assist in ensuring that the 457 programme meets its intent of acting as a supplement to, rather than a substitute for, Australian workers," he said.
It will also reduce the vulnerability of 457 visa holders, who are only permitted to work for an approved sponsor and who are not eligible for unemployment benefits, Mr Dutton said.
"The government values the contribution made by the many skilled persons who work in Australia on 457 visas, but where there is an Australian worker ready, willing and able to perform a role it is the government's policy that they have priority."
His statement follows increased pressure from Labor to tighten the rules surrounding the 457 visa program.
Mr Dutton criticised the opposition for increasing the time visa holders could remain in Australia after their jobs end from 28 days to 90.
Bill Shorten took his campaign on the issue to north Queensland on Wednesday.
The Labor leader believes there is a need for foreigners to fill skills gaps, but some of the jobs being advertised for 457 visas are occupations which could be carried out by Australians.
"We think that in a beauty parade we'd rather see an Australian tradesperson get the job than someone come in from overseas when there's an Aussie that can do the same work," he told reporters in Mackay.
Labor wants jobs to be advertised locally for at least four weeks before a foreigner is sourced.
Prime Minister Malcolm Turnbull again took aim at Mr Shorten and his "extraordinary hypocrisy", claiming he issued more 457 visas while employment minister than any of his predecessors or successors.
Mr Turnbull said Labor's latest campaign was designed to cover up the divisions in the party on the issues of national security and border protection.
"Mr Shorten should stop his hypocritical complaints about skilled migration and stand with the government in saying 'no' to illegal migration, saying 'no' to people smugglers and supporting our legislation," he told reporters in Canberra on Wednesday.
"That's what we ask him to do in Australia's interests."
