Skilled migrants would be provided with incentives to settle in regional centres and cities other than Sydney and Melbourne under a new population policy to be signed off by federal cabinet.
The policy will go to cabinet within two weeks, and could even be considered on Monday, The Australian reports.
Citizenship Minister Alan Tudge said 87 per cent of skilled migrants currently settled in Melbourne and Sydney, cities struggling with population pressures.
"In other parts of the country we have mayors, or indeed state premiers crying out for more people, and they want their populations to grow and they have the jobs to support it," he told the ABC on Sunday night.
"That's why we are seriously looking at this question, to see whether or not we can provide further incentives for new arrivals to want to go to some of the smaller states, such as South Australia, and then perhaps further conditions upon visas to at least require that person to stay there for a few years where they hopefully will make it their home, and before they become a citizen."
