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The government has announced a cap of 21,700 on the number of skilled workers from outside the European Economic Area allowed into the UK.

The figure is a cut of 6,300 on the equivalent figure for 2009.

It excludes employees transferred by companies from abroad - in future they will be allowed to stay for up to five years if their salary exceeds £40,000.

Home Secretary Theresa May said immigration would become "sustainable", but Labour called the plans "a con".

The exclusion from the cap of intra-company transfers - for example someone working for a large US company taking up a job in their London office - is seen as a success for the business lobby.

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In addition to an apparent unlimited number of such transfers if the salary is above £40,000, firms are also being allowed to bring members of their staff to work in the UK for a year if the job is in ICT and the salary is over £24,000.

Altogether 22,000 employees came to work in the UK via intra-company transfers in 2009.

The government's 21,700 figure will include 1,000 people let in under a new "exceptional talent" scheme applying to scientists, academics and artists, Mrs May told MPs.

The coalition has committed itself to reduce net migration from 196,000 to the "tens of thousands" by 2015.

Mrs May said: "We will have to take action across all routes to entry - work visas, student visas, family visas - and break the link between temporary routes and permanent settlement."

A total cap of up to 43,700 - for skilled workers and intra-company employees - was recommended by migration advisers last week.

The 21,700 cap announced, added to the 22,000 intra-company transfers last year is equal to the top end of the advisory committee's suggestion.

During the election campaign, Tory leader David Cameron pledged to cap immigration levels, while his then Lib Dem rival Nick Clegg - now his deputy - said that policy ignored the fact that most immigration came from the EU.

����ý political editor Nick Robinson said tense talks between the Tories and Lib Dems had resulted in a compromise.

Last year 50,000 visas were issued for tier one (highly skilled) and tier two (skilled) workers from outside the European Economic Area (the EU plus Iceland, Norway and Liechtenstein).

'Wholesale confusion'

A consultation on cutting the number of non-degree level students coming to the UK - due to be published soon - has not yet got cross-coalition agreement, the ����ý has learned.

Mrs May said: "Nearly half of all students coming here from abroad are actually coming to study a course below degree level and abuse is particularly common at these lower levels - a recent check of students studying at private institutions below degree level showed that a quarter could not be accounted for.

"Too many students, at these lower levels, have been coming here with a view to living and working, rather than studying. We need to stop this abuse."

For Labour, shadow home secretary Ed Balls said the government was in "wholesale retreat" and "wholesale confusion" over immigration policy, while its plans would do "huge damage to UK companies and jobs".

He added that the lack of a limit on intra-company transfers meant the "supposed cap is a con, a guess, a fig-leaf, no cap at all".

Peter Skyte, national officer for the Unite union, said: "The government has spectacularly squandered the opportunity to deal with misuse and abuse of the intra-company transfer scheme in its migration cap announcement in the face of largely empty threats by big business to withdraw investment from the UK.

"The measures announced will do little to prevent employers from abusing the system, and manipulating tax and accommodation allowances to undercut UK resident workers."

However, Sir Andrew Green, chairman of Migration Watch UK, said: "This is a thorough and wide-ranging package. The government's decision to break the link between economic migration and settlement is a major step forward.

"These measures are a very good start on delivering the government's immigration pledges."

John Cridland, director general designate of the Confederation for British Industry, said: "This is a good result for the economy and for the country as a whole, and sends out the message that Britain really is open for business...

"The new system rightly gives priority to people with a job offer over those without one, so companies will still be able to access talent from around the world."

David Frost, director general of the British Chambers of Commerce, said: "It is right that companies that require skilled workers for a specific job move to the front of the queue, as these individuals are essential for economic growth and ensuring that the UK remains competitive."