Australians will choose a new government on August 21, and both major parties promise to reduce immigration and bring in new measures to stop a steady flow of asylum seekers.

The conservative opposition promises a hard line on boats smuggling asylum seekers into Australia's northern waters.  It plans to either turn the vessels around and send them back to their departure point or transfer unauthorized arrivals to an offshore processing camp on the tiny Pacific island of Nauru.

The leader of the opposition Liberal Party, Tony Abbott, accuses Prime Minister Julia Gillard of failing to protect Australia's borders.

"When Julia Gillard was the shadow immigration minister she used to say, by press release, 'another boat, another policy failure,' said Abbott.  "Now she didn't get a chance to say that very often because under the Howard government there were, on average three boats a year, under this government there have been, on average, three boats a week. There have now been 151 policy failures from this government and that's on the logic of the prime minister herself."

The governing Labor party has outlined plans to handle the problem of illegal asylum seekers by building a refugee transit center in neighboring East Timor.  The aim is to deter illegal migrants.

Although the plan met with a lukewarm response from authorities in East Timor, Prime Minister Gillard remains committed to it.

"I do think we should have a regional processing center," said Gillard.  "I do think we should try and take away from people smugglers the very product that they sell so there'd be no point getting on a boat and risking your life paying someone to do that because you would end up in the regional processing center.  That's what I'm aiming for."

Along with the economy, health care and education, immigration has emerged as one of the key issues ahead of Saturday's election.

Australia grants asylum to more than 10,000 refugees a year through international programs.  And it accepts hundreds of thousands of other legal immigrants.  But illegal migrants smuggled in by boat, most of them from Iraq, Afghanistan and Sri Lanka, have many voters worried.

"The boat people, I don't think it's fair that some of our people are stuck in tents, out in caravan parks and these poor people I suppose you would say come in from overseas and they are given homes straight away and all, but the old Aussies seems to be forgotten," said an elderly Australian woman interviewed for this story.

Modern Australia was built on successive waves of European, Middle Eastern and Asian settlers. A quarter of the population was born overseas but there remains a suspicion of asylum seekers, especially those who come in illegally.

John Warhurst, a political scientist at Australian National University in Canberra, says there is a feeling that shadowy foreigners who arrive unannounced by boat could destabilize society.

"It is quite easy to stir the issue of immigration and boatpeople in a way which suggests, well, maybe some terrorists might arrive by boat and it also feeds into the issue of the alleged impact of immigration generally on questions of employment, on questions of services," said Warhurst.  "It probably feeds into the sense of those in the west of Sydney that issues like transport, housing and employment are all somehow being affected by high levels of immigration and the boatpeople issue."

The conservative opposition says it will cut the number of legal migrants by almost half from the current 300,000 people a year if it wins Saturday's election.

Prime Minister Gillard also has promised to reduce immigration to what she calls more "sustainable" levels.  Both parties understand that many Australians are concerned about what they view as a rapidly growing population, which adds pressure on housing and water supplies, and more congestion on city streets.

Business groups, however, worry that cutting immigrant numbers could deprive Australia of desperately needed skilled workers, which would damage the economy.

James Pearson, the chief executive of the Chamber of Commerce and Industry in Western Australia, urges the major parties to rethink their policies.

"What is important to remember is that Australia is a migrant-based society and with a rate of economic growth in this state at least (that is) the envy of the rest of the developed world, we're one of the few parts of the developed world which really is crying out for new, skilled workers," said Pearson.  "We are actively recruiting.  We've got our 'Australia is open for business' sign there.  The only thing we need to do now is convince our federal political leaders that this country needs a strong immigration program, not cutting back."

Both the Labor government and the opposition say that reduced immigration will not damage the economy.

Prime Minister Gillard and her rival, Tony Abbott, are immigrants and were born in the United Kingdom.