The Australian government will seek to limit the number of foreign-trained doctors allowed into the country under a new plan.

Under the proposal titled "Right Worker, Right Location -- Controlling Supply of Overseas-trained doctors" a new health agency will be established, granting the government direct control over the distribution of doctors.

If it goes ahead, employers will require an endorsement from the new agency before they can hire an overseas-trained doctor.

The agency will have the power to force employers to take additional steps to hire locally-trained doctors.

A spokesperson for the Minister for Regional Services Bridget McKenzie said the policy had not been completely fleshed out but confirmed that positions would not be open to foreign doctors without the agency's endorsement.

"Without the endorsement, the nomination will not be accepted by the Department of Home Affairs," he said.

"An endorsement will only be provided where the advertised position responds to genuine workforce need."

The agency will form a key part of the government's plan to reduce the number of visas for foreign General Practitioners (GPs) in urban areas by 200 a year.

The Department of Health has expressed concerns that 74 percent of overseas-trained doctors worked in metropolitan areas instead of filling vacancies in rural and remote areas.

"Supplier-driven costs are reduced by slowing down the rate of growth of doctors in over-serviced metropolitan and outer-metropolitan areas," department documents previously published by News Corp Australia said.

"Unnecessary growth in medical services, over-servicing, is being experienced in these areas due to an increased supply of doctors rather than genuine increases in patients' needs or services."