Canada's immigration department is crafting plans for a $2 billion investment to reduce a backlog of 700,000 would-be immigrants, a major newspaper has reported.

The federal immigration department is working on a strategy to boost immigration to 320,000 a year over five years.

But first it wants to tackle the chronic backlogs that can mean some would-be immigrants are stuck waiting up to two years for admission to Canada. At $3,000 per case, clearing the backlog over two years would cost $2 billion, although Ottawa would recoup a chunk of the cost through processing fees, the paper quoted sources as saying.

Meanwhile, provincial and territorial immigration ministers have met in Ottawa and sent the clear message that more immigrants are needed to meet critical labour shortages.

"We have a booming economy, we have a shortage of skilled workers. We need people in British Columbia at all levels of the employment spectrum," said Wally Oppal, the province's multiculturalism minister.

Immigration ministers agreed that more must be done to encourage immigrants to settle outside the big urban centres, traditionally home to three-quarters of all newcomers.

There was broad agreement that more must be done to help foreign-trained professionals who are shut out of Canada's job market because of restrictions by regulatory bodies.

“Immigration has always been, and will continue to be a vital tool for nation building in Canada, and a successful immigration program is essential to our continuing economic and social prosperity,” said Immigration Minister Joe Volpe.

Canada faces many sectoral and regional labour shortages. Within the next decade newcomers are expected to account for all net labour force growth.