Fast food businesses such as McDonalds and KFC will no longer be able to sponsor foreign workers on temporary visas unless they can prove a specific need, the federal government has announced.

"Australian workers, particularly young Australians, must be given priority," Immigration Minister Peter Dutton said in a statement on Thursday.

Mr Dutton has ended the Fast Food Industry Labour Agreement, introduced by the Gillard government in 2012, which allowed hundreds of foreign workers take jobs at fast food outlets across Australia.

However individual businesses will still be able to make requests under normal labour agreement arrangements to ensure that exceptional circumstances can be considered.

"Genuine business needs for overseas workers which contribute to economic growth will still be considered," Mr Dutton said.

Existing foreign workers will be forced to leave Australia once their agreements run out unless their employer is able to present an individual case as to why they should remain in the country.

It is the first time an entire sector has been banned from using the visas.

Crossbench senator David Leyonhjelm supports the industry-wide ban, saying fast food is a training ground for young workers.

"And I'd love to see it retained as a training ground for young workers," he told reporters in Canberra.

"If 457s are what's preventing that then I think that's unfortunate".

Mr Dutton said the government had applications for 68 positions before it now.

"I am more concerned about mums and dads who want their teenage kids to get a job," he told reporters in Canberra.

"Because it teaches them the value of money, ... respect for people who are coming into the shop ... a work ethic they might not have got otherwise."

Unions welcomed the announcement but said the change wouldn't address the youth unemployment crisis, especially when there were 1.2 million workers with temporary visa working rights.

"The idea that removing 500 foreign workers is going to fix the youth labour market is absurd," ACTU president Ged Kearney said in a statement.

"If the government was serious it would make substantive changes to the list of occupations in the 457 program, rather than dog-whistling and fiddling around the margins."

The 651 occupations in the program include maritime workers, childcare workers, hairdressers, secondary school teachers, cafe managers and countless other jobs that could be filled by young local workers.