The Department of Immigration and Border Protection has announced it has stopped processing some lower-priority skilled visa classes.
It has dismayed many people who were awaiting a decision on what they call "points visas", also known as "Priority 5".
The cap and cease announcement affects people overseas who met the criteria for permanent skilled migration to Australia under three visa subclasses.
They are subclass 175 - Skilled Independent, subclass 176 - Skilled Sponsored and subclass 475 - Skilled Regional Sponsored.
These so-called "priority five" applications remained valid, but were categorised as low-priority by the government while administrative officials continued to process other applications.
This week, the Department of Immigration and Border Protection announced they have stopped processing these applications.
Marion Le is a Registered Migrant Agent and a member of the MIA, the Migration Institute of Australia.
She says the MIA has taken legal action against the decision, claiming it's unconstitutional.
"Without being too technical I don't doubt that it will be challenged and from my understanding of it, it probably will be overturned. But in the meantime, we've got a whole lot of people who are in serious trouble because they have been waiting for such a long time to have a decision made on their legally and legitimately lodged applications for some general skilled migrant visas."
Sydney based sponsor Daniela Rios says her brother has waited over six years.
"My brother, he applied in May of 2009 and he's been waiting for six and a half years and that means that (at) the time of his application, he was 33 years old and now he is almost 40 which means that he won't be able to get the points any more."
Daniela Rios says her brother was not aware that there would be a cap this year.
She claims the Australian government misled applicants.
"The applicants, they invested and applied for an offer that the Australian government gave them with a legal instrument. He (Rios' brother) invested resources (like) the rest of the applicants and he spent six and a half years waiting for the outcome of what I think was a dishonest offer. And I think they have been irresponsibly treated."
Migrantion agent Marion Le says the process of informing applicants about the cap system has been complicated.
She explains the government provided applicants with very little notice between the announcement and the implementation of the cap.
"Michaelia Cash - when she was Assistant Minister for Immigration and Border Protection up until last week - and registered this order for the cap and cease in September the 18th but it wasn't actually posted on to the Department's site, we weren't told, until just three days before she moved into her new portfolio. So no one was given any notice. Now when you make something that's going to apply retrospectively and then implement it with such a short notice between the announcement and the implementation, the people who were going to be affected had no time at all to even look at it or make any comment."
Indian resident Gagan Singh is also affected by the new ruling.
Mr Singh has told SBS radio's Punjabi program he's been waiting for a long time for a response from the Australian authorities.
"I am extremely disappointed. I haven't been able to sleep for two days now. I am married, and my wife and son's life have been on hold too all this while too. It has been five years, and now I was expecting my visa will come through, but suddenly the government has done this. I'm very disappointed because the time I've lost will never come back. If I knew this would happen, I would have applied for a visa to another developed country like Canada and gone there."
Gagan Singh says he feels "Priority 5" applicants have been unfairly treated.
"We are skilled workers. My occupation was in demand when I filed my visa application, and we can contribute to the economy of Australia. We are not refugees, or people who are making an illegitimate entry into Australia, that's why they must consider our application. This is totally wrong, absolutely wrong."
The federal government says it will refund people the cost of their applications.
But Marion Le says that's insufficient considering the widespread negative impact of the issue.
"We've got a whole lot of people out there, 30,000-odd people, some of them offshore of course but we've got some very, very disgruntled people out there and the government that once again has made a very short-sighted decision and one that's going to impact not only on the people who've applied for the visas but also in many cases on their family members here."
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