The move could directly stop hundreds of thousands of foreign workers from keeping their H-1B visas while their green card applications are pending.
The proposal which is being shared between the Department of Homeland Security Department (DHS) heads is part of Trump's "Buy American, Hire American" initiative promised during the 2016 campaign, US-based news agency McClatchy DC Bureau reported.
It aims to impose new restrictions to prevent abuse and misuse of H-1B visas, besides ending the provision of granting extension for those who already have a green card.
"The act currently allows the administration to extend the H-1B visas for thousands of immigrants, predominantly Indian immigrants, beyond the allowed two three-year terms if a green card is pending," the report said.
"The idea is to create a sort of 'self- deportation' of hundreds of thousands of Indian tech workers in the United States to open up those jobs for Americans," it said, quoting a source briefed by Homeland Security officials.
"The agency is considering a number of policy and regulatory changes to carry out the President's Buy American, Hire American Executive Order, including a thorough review of employment-based visa programmes," said Jonathan Withington, chief of media relations for United States Citizenship and Immigration Services (USCIS).
The H1B visa is a non-immigrant visa that allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise.
It is typically issued for three to six years to employers to hire a foreign worker. But H-1B holders who have begun the green card process can often renew their work visas indefinitely.
The technology companies depend on H-1B to hire tens of thousands of employees each year from countries like India and China.
The proposed changes would have a dramatic effect particularly on Indian visa holders considering more than half of all H-1B visas have been awarded to Indian nationals, the report said, quoting the Pew Research Center report.
"This would be a major catastrophic development as many people have been waiting in line for green cards for over a decade, have US citizen children, own a home," Leon Fresco, who served as a deputy assistant attorney general for the Justice Department in the Obama administration who now represent H-1B workers, was quoted as saying in the report.
Fresco estimates more than 1 million H1-B visa holders in the country are waiting for green cards, many of whom are from India and have been waiting for more than a decade.
Trump had made the alleged abuse and fraud in H-1B visa system a major election issue during his campaign.
After becoming the president, he signed an executive order aimed at tightening the process of issuing the H1B visas.
Trump had said the order was the first step to initiate "long overdue" reforms to end "visa abuses".