Australia's acting immigration minister says the refugee intake is being slashed by thousands of places because of pressures on hotel quarantine.
The federal government is cutting the refugee intake by 5000 places for the next four years.
Its decision is expected to save $1 billion.
Alan Tudge says the reduced cap of 13,750 places will still see more refugees enter the country than in the last financial year, when the coronavirus pandemic forced the closure of international borders.
Mr Tudge said state quarantine arrangements for international arrivals had become a "speed limit" on all forms of migration.
"Overall migration is a fraction of what it has been in previous years and all migration is being impacted by that," he told ABC radio on Monday.
But Mr Tudge indicated the refugee intake could be restored earlier than planned.
"We reserve the right, as we do each and every year, to reset what the humanitarian program might look like for the following 12 months," he said.
"If next year a different decision is made, then it will be made in the budget context."
Australia's overall immigration program has crashed due to coronavirus.
Treasury forecasts more people will leave the country in the next two years than will arrive, dealing a massive blow to the economy, which is already deep in recession.
Australia has not experienced negative net migration since the Second World War.
There will be one million fewer people in Australia by the end of 2022.
Various groups have suggested taking more refugees to help fill the void, but the government is focused on attracting more skilled overseas workers and international university students.
The states are responsible for running hotel quarantine programs for Australians coming home from overseas.
The federal government has imposed a weekly cap on international arrivals to ease pressure on the system, but has rejected calls to step in and establish commonwealth facilities.