Immigration Minister Scott Morrison admits that those on student or visitor visas seeking permanent protection in Australia will also be inadvertently affected in the short-term by the freeze on permanent protection visas for asylum seekers.
"In the short term any onshore application, which may include those who obviously arrived legally in Australia and have made an application, their applications will be effected by that decision," Mr Morrison said.
The federal government has put a stop to permanent protection visas until mid-2014, in a bid to get around the problem of Labor and the Australian Greens vetoing temporary visas for asylum seekers.
The dramatic move came as the coalition attacked Labor over its inability in government to stop the boats at great cost to the federal budget.
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Under the new scheme, the number of permanent protection visas on offer before July 2014 would be capped at 1650, which exactly matches the number of visas already approved this financial year.
As well, none of the 20,000 asylum seekers who are on bridging visas and living in the community without work rights will be able to apply for permanent protection.
"The government today has shut Labor's protection visa shop ... the door has been sealed shut," Mr Morrison said.
The cap would remain in place until Labor and the Greens reversed their opposition to the reintroduction of temporary protection visas (TPVs).
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Labor and the Greens voted in the Senate this week to disallow TPVs which Mr Morrison introduced by regulation after the September election.
The cap will not apply to the government's offshore refugee and humanitarian program, such as the 500 visas allocated for people fleeing Syria.
Greens senator Sarah Hanson-Young described Mr Morrison as the "minister for cruelty".
The Refugee Council of Australia said it was a new low, at a time when global asylum applications are at their highest level in more than a decade.
Labor immigration spokesman Richard Marles said TPVs had been made redundant by the agreement with Papua New Guinea to resettle asylum seekers.
"What the PNG arrangement did was take Australia off the table, and that is what has made the difference in helping to stop the boats," he said.
Mr Morrison signalled the government would be announcing other new measures, but pulling out of the UN refugee convention was not "under active consideration".
The minister will get a fresh chance to introduce a new regime of measures from July 2014 when the Greens and Labor share the balance of power with minor parties such as the Palmer United Party.
PUP leader Clive Palmer said his party would be seeking a system that was more transparent, provided faster assessment and got children out of detention.
Mr Morrison also on Wednesday introduced to parliament new laws to abolish "complementary protection visas".
The visas were put in place in March 2012 to protect people who don't meet the full refugee criteria but would be at risk of serious harm if returned to their homeland.
The main aim was to protect women fleeing honour killings and genital mutilation.
Under the new laws, the minister would have the power to grant a visa "dependent upon the individual circumstances of the case".