Immigration Minister Joe Volpe has announced he is creating an "in-Canada" economic class of immigrant, a step whose future will likely be dependent on the ruling Liberals returning to power in the coming election.

The new category is tailored to skilled newcomers already in the country who are holding a job or who have Canadian education.

The move is part of an additional $700 million investment over five years to make improvements to the federal immigration system. These improvements include funding to start reducing the current inventory of applications at Citizenship and Immigration Canada, plus the new process to allow immigrants with Canadian experience or Canadian education to apply for permanent resident status under the new In-Canada Economic Stream in 2007.

The change will apply to people in Canada on temporary work permits. In the past, these people would have to leave the country to begin their application for Canadian citizenship.

Volpe says it makes no sense to force people already in Canada, holding a job and filling a labour need, to leave all that behind and go abroad in order to apply for citizenship. So he's going to pledge $300 million in improved processing and settlement services to help make it happen.

“(The announcement) is an important step toward fixing and improving the immigration system,” said Volpe. “By beginning to reduce the number of outstanding applications and moving to actively recruit those who best meet Canada’s labour market needs—such as temporary foreign workers and international students already in Canada — we will build on the improvements already under way to Canada’s immigration system.”

Volpe said applicants with experience in Canada’s labour market or educational institutions are already well positioned to integrate quickly and successfully into Canadian society and the economy.

"In ensuring that people with significant labour market or educational experience can make a smooth transition to permanent resident status, we will help build a more responsive and proactive immigration system," he said.

The department is expecting the move could benefit some of the 70,000 foreign students who come to Canada to study each year — many holding skills the immigration department would like to keep in the country.

In a separate move, another $400 million will be earmarked over the next five years to step up processing of a backlog of immigrant applications. Of the 700,000 caught in bureaucratic limbo, more than 500,000 are skilled workers. The others are family members.

It's expected the investment could reduce the backlog by up to 120,000.