The concerns have fuelled disquiet over issues such as the worsening housing crisis, which is rippling out from the largest city of Auckland.

The opposition New Zealand First party said the government had been panicked by polls on immigration and had suddenly reversed its stance that the country's immigration settings were about right.

"The plain fact is after years of denial, their polling is telling them the public are concerned," New Zealand First leader Winston Peters said in a statement.

The government had "created a massive problem" by bringing in huge numbers of unskilled migrants, and the parent category meant their parents had "flooded in also," straining the provision of housing, health and education, said Peters.

"Over 15 years we have taken in over 87,000 parent migrants who have no requirements to contribute to the economy while they receive free access to public health immediately, and superannuation after just 10 years here," he said.

The business lobby group, Business New Zealand, said the changes were an encouraging sign of progress towards a migration system that benefited the workforce and the country generally.

"It is positive that the government has taken on board some of the concerns of employers regarding the skill base of those achieving permanent residency status," Business New Zealand chief executive Kirk Hope said in a statement.