Today host Sarah Abo has accused coalition leader Angus Taylor of blaming migrants for Australia's housing crisis, telling him: 'Apart from Indigenous Australians, we're all migrants.' 

Taylor appeared on the Today show following his budget reply speech, where he unveiled a major policy proposal to cap migration based on the number of homes built each year.

But when pressed by Abo to reveal the Coalition's proposed annual migration intake, Taylor refused to put a figure on it.

'What we've seen under Labor is that they've set migration targets without regard for housing construction. This has been insanity. It's been madness,' Taylor said.

'What we've seen is way fewer houses than they planned and way more people than our country can absorb through our housing supply.'

Abo challenged Taylor over whether the housing crisis was the fault of multiple governments, not just Labor.

'Is it their problem, or has it been consecutive governments who have stuffed that up?' she asked.

Taylor conceded that may be the case, but insisted the Coalition's proposal would force governments to align migration levels with housing supply.

'Well, that may well be right, and what we're saying is it's got to change,' he said.

'What we're proposing here is each year the housing minister would say, 'We've got so many houses that have been built, that means we can absorb this growth in population,' and that will set a cap on migration.'

Abo accused Taylor of linking migrants to Australia's housing shortage.

'You're tying migration to housing, but what are you doing about the current situation for Australians right now?' she asked.

'Who, by the way, apart from Indigenous Australians, are all migrants? You're talking about migrants being the people who are causing this housing problem when it's the housing problem that's come first.'

Abo said Australia built only about 172,000 homes last year and remained 'behind the eight ball' on supply.

'How will you cap migration at a figure that you don't actually know the amount of?' she asked.

Taylor hit back at the claims he was blaming migrants themselves.

'It's not migrants causing the problem. It's the government causing the problem because they've got their policy wrong,' he said.

Abo then argued Taylor's own logic would effectively mean accepting almost no new migrants because Australia remained so far behind on housing construction.

'Based on those figures, Angus, you would accept no migrants because we are so behind the eight ball when it comes to building new homes,' she said.

Taylor said migration would need to fall sharply in the short term while housing supply caught up.

'There has to be a sharp reduction to do that.

'We've said that there needs to be more than a 70 per cent reduction from the peak under Labor, and that is a big reduction. But that is what's required to get the market back into balance.'

It remains unclear where the Coalition would make the deep cuts to migration intake needed to meet its proposed targets. 

Working holiday visas are politically sensitive, with regional industries including agriculture heavily reliant on seasonal foreign workers to fill labour shortages. 

Taylor suggested on Thursday night that international student visas would be an obvious area for reductions, despite education being one of Australia's biggest export industries and a major source of economic revenue. 

Daily Mail political editor Peter Van Onselen said Taylor's policy to link migration to housing supply 'made sense' in principle.

'Australia can't keep pretending that record population growth has no impact on rents, house prices, infrastructure, schools, hospitals and roads. 

'Migration has economic benefits, we know that, but only if the country has the capacity to absorb it. 

'When housing construction falls well short, voters are entitled to ask why the migration intake keeps running ahead of the nation's ability to accommodate extra people.'

Budget papers released on Tuesday revealed the Albanese government expects 55,000 more migrants to arrive over this financial year and next than previously forecast.

The budget also projects net migration will increase by 990,000 people over the four financial years to July 2029.