The move could directly stop hundreds of thousands of foreign workers from keeping their H-1B visas while their green card applications are pending.
The proposal which is being shared between the Department of Homeland Security Department (DHS) heads is part of Trump's "Buy American, Hire American" initiative promised during the 2016 campaign, US-based news agency McClatchy DC Bureau reported.
"The act currently allows the administration to extend the H-1B visas for thousands of immigrants, predominantly Indian immigrants, beyond the allowed two three-year terms if a green card is pending," the report said.
"The idea is to create a sort of 'self- deportation' of hundreds of thousands of Indian tech workers in the United States to open up those jobs for Americans," it said, quoting a source briefed by Homeland Security officials.
The H1B visa is a non-immigrant visa that allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise.
It is typically issued for three to six years to employers to hire a foreign worker. But H-1B holders who have begun the green card process can often renew their work visas indefinitely.
The proposed changes would have a dramatic effect particularly on Indian visa holders considering more than half of all H-1B visas have been awarded to Indian nationals, the report said, quoting the Pew Research Center report.
"This would be a major catastrophic development as many people have been waiting in line for green cards for over a decade, have US citizen children, own a home," Leon Fresco, who served as a deputy assistant attorney general for the Justice Department in the Obama administration who now represent H-1B workers, was quoted as saying in the report.
Trump had made the alleged abuse and fraud in H-1B visa system a major election issue during his campaign.
After becoming the president, he signed an executive order aimed at tightening the process of issuing the H1B visas.
Trump had said the order was the first step to initiate "long overdue" reforms to end "visa abuses".
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