The cabinet agreed on a draft law that would allow the authorities to punish asylum applicants who lie about their identities - for example by pretending to be Syrian so their claims have a better chance of being accepted - with a fine of up to 5,000 euros ($5,373) or three weeks in jail.
Those who stay in Austria despite being ordered to leave face fines of between 5,000 and 15,000 euros or six weeks in jail, said the conservative People's Party (OVP), which is in coalition with the Social Democrats (SPO).
The centrist government has this year tightened migration laws. The anti-immigrant Freedom Party (FPO), whose candidate Norbert Hofer made it to Sunday's presidential election run-off, has been leading opinion polls with around 33 per cent for months.
"Certainly these (measures) have in part a signalling effect," OVP junior economy minister, Harald Mahrer, said when asked if the law was designed to scare off migrants. "What kind of rule of law would we have in the republic if we said we do not punish these things?"
The bill needs the approval of parliament. Other European countries, such as Denmark and Sweden, have also toughened asylum laws or tightened border controls in recent months as European Union member states have failed to agree on a mechanism for distributing migrants among themselves.
Austria's Greens criticised the bill and called for the costs of accepting asylum seekers to be spread among European Union member states.
"That way you can stop the nationalist competition for who can scare off asylum seekers the most," said Alev Korun of the Greens.
Austria has announced a cap on asylum claims of 37,500 this year, having taken in 90,000 asylum seekers last year, when it was swept up in Europe's migration crisis.
The Interior Ministry said it had received 37,000 asylum applications by the end of October, but only counted 30,000 as relevant to the cap as it strips out certain cases, including those it believes should be processed in other countries.
One SPO minister said emergency measures would not be needed this year or next year, when the cap falls to 35,000, to stay below the limit.
Reuters
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