Speaking on the BBC's Andrew Marr Show, the home secretary said: "I'm proposing it shouldn't be possible for somebody to come into this country to take a skilled job unless that job has been advertised to a British worker through Jobcentre Plus.
"I'm proposing that we should more clearly link those areas where there are shortages of skills in this country with actually trying to grow the skills of British workers. So we'll be putting skills reviews, skills action alongside everywhere we identify a shortage."
Migrant workers will have to attain a Masters degree instead of a Bachelors degree and will have to have a previous salary of £20,000 rather than £17,000 in order to be eligible to work in the UK.
Smith added: "[Migrant workers] have got to have a higher qualification as from this April, I'm now announcing, than has previously been the case. Migration is important for this country, but at a time when we have more people actually looking for work within the UK, it is also economically right that we are more selective about those who come into the country."
Research from the Chartered Management Institute shows two thirds of managers (66%) think their organisation would benefit from "exposure to different societal cultures".
But the Home Office today reported work applications from the eight accession countries within the EU have fallen to their lowest level since they joined the European Union in 2004.
In the three months to December last year, there were 29,000 applications from workers from Poland, Lithuania, Latvia, Hungary, Slovakia, Slovenia, Estonia and the Czech Republic - down from 53,000 in the same period in 2007.
The Home Office report shows the decrease is mainly explained by a drop in approved Polish applicants, which fell to 16,000 in the last quarter of 2008 from 36,000 in the same period in 2007.
