The major turnaround was welcomed Thursday by employers who have lost hundreds of millions of dollars since a crackdown saw 400,000 illegal migrants, mainly from Indonesia, sent home during a four month amnesty which ended in March.

Malaysian Employers Federation executive director Shamsuddin Bardan said the move was "very much appreciated" as small and medium enterprises were facing a shortage of 100,000 workers.

Overall, the departure of illegals under the latest amnesty caused a shortage of some 200,000 workers in the manufacturing sector, 150,000 in construction, 50,000 in plantations and 20,000 in the services sector, the cabinet has been told.

Shamsuddin noted, however, that the government's latest directive would only solve Malaysia's labour supply problems in the short-term.

"On a longer-term basis we need a more consistent policy on the employment of foreign workers and we should manage them on human resource requirements and not from a security angle," he told AFP, referring to the perception that migrant workers cause crime and other social problems.

Home Minister Azmi Khalid announced late Wednesday that Malaysia would allow foreign workers to enter the country on tourist visas and seek employment provided local authorities have a record of their fingerprints.

The cabinet accepted the procedure as the worker shortage in the country could become more serious if action was delayed, Azmi said.

The surprise move followed the collapse of a plan to bring the expelled workers back legally. The government announced earlier this week that special one-stop centres established in Indonesia to facilitate their return had been closed because of a poor response.

Azmi said he believed bureaucracy, high fees imposed by the Indonesian government and delays in processing documents were keeping the Indonesians away.

Analysts and industry sources welcomed the new directive, saying the government had shown flexibility and willingness to respond to the demands of industry.

But Abdul Razak Baginda, executive director of the Malaysian Strategic Research Centre, urged the government to take a long-term view of the problem.

"The government should be more strategic in its outlook and perspective, rather than being reactive," said

Malaysia is one of the largest importers of foreign labour in Asia. Foreign workers, both legal and illegal, number around 2.6 million of its 10.5 million workforce, officials say.

The country has launched several crackdowns on illegal workers since 1992 but each one led to a labour shortage followed by new illegal immigration -- a pattern, which has already been apparent after the latest blitz.

Some employers say they prefer cheap illegal labour because recruiting foreign workers through the proper channels is a tedious and costly process involving placing bonds with the government, repatriation expenses, charges for work permits and providing accommodation and transport.

For its part, the government, in its attempt to make the workforce legal, is now looking for workers from countries other than Indonesia, including Pakistan, India, Sri Lanka, Nepal, Myanmar and Vietnam.

More than a thousand Pakistanis have already arrived in Malaysia out of an expected 100,000.