JULIA Gillard has broadened her population policy pitch, promising to shield crowded Australian cities from overpopulation.

But at the same time she has offered $200 million to underpopulated regional communities to attract residents.

The comments came as Tony Abbott - after a visit to western Sydney, an area under pressure from population growth - said the asylum-seeker issue was making Australians feel they were losing control of their own destiny. He promised annual reviews of immigration intakes and guaranteeing a Coalition government would ensure infrastructure development kept up with population growth.

But business groups reacted with alarm to the prospect of both parties cutting migration, warning skilled migrants were vital to the economy.

The population debate has emerged as one of the key themes of the election, particularly on the fringes of major cities.

The issue has also become entwined with border security, with a stream of asylum boat arrivals off northern Australia adding to frustration and heightening pressure on governments.

After ousting Kevin Rudd on June 24, Ms Gillard rejected the argument for "a Big Australia" and shifted Labor's policy emphasis towards sustainable growth.

Yesterday, Ms Gillard highlighted the complexity of the issue, promising to fight unsustainable growth but pledging to support communities that wanted to embrace growth but struggling with housing shortages.

"They are optimistic, forward-looking communities where jobs are vacant and there's scope to grow," Ms Gillard said. "But that growth can't occur without support.

"What is needed is to give proper support to regional communities that are already growing - communities that have solid job opportunities, secure water supplies and abundant land for housing and investment - communities that are open to expansion and growth."

Under her plan, the mayors of 46 regional communities would be entitled to apply for funding, but would have to demonstrate they had available land and that their communities had jobs.

Ms Gillard used the Queensland mining and sugar town of Mackay as an example of a community that might be eligible, noting that it had seen 9.6 per cent jobs growth over the past five years but suffered a housing shortage.

Declaring the election a referendum on infrastructure and services, she said: "Building Better Regional Cities will help change situations like that by enabling councils to fast-track existing plans to build housing for families in well-designed, sustainable neighbourhoods.

"That will help relieve the nation's housing-supply deficit and take pressure off our bigger urban centres such as Brisbane and Sydney."

The commitment would not affect the budget bottom line because it would be funded by a $52 million underspend in the existing Housing Affordability Fund and lengthening of the duration of the National Rental Affordability Scheme, with the "rephrasing" making $146 million available for the regional program.

Speaking to Sky Television's Australian Agenda program, Mr Abbott said he had nothing against a higher population, provided it was sustainable.

"What I completely reject is that we should just take for granted that we're going to bring in 180,000 or 300,000, which are the current figures, year-in year-out, come what may until 2050 and beyond," Mr Abbott said.