The move followed a meeting of the Home Office's IT Skills Sector Panel on 21 August that considered the state of the IT labour market. It unanimously recommended "that all occupations should be removed from the Work Permits (UK) IT shortage occupation list".
There will now be no official shortage list for IT skills and anyone seeking a work permit will have to show that a job has been advertised in either a national newspaper or the trade press.
The decision comes into effect on Sunday (1 September) and will make it much harder for overseas IT workers to get work permits. It has been welcomed by organisations representing UK-based contractors.
Jane Akshar, chairman of the Professional Contractors Group, which heavily lobbied the Home Office on the issue, said: "This is excellent news. It demonstrates how we have been able to work with the Government and other members of the Skills Sector Panel to ensure that these skills were not in short supply in the UK."
Speaking before the decision, David Rippon, chairman of the British Computer Society IT directors group Elite, said contractors would still face pressure from overseas IT workers. "Market pressures in long-term industrial trends such as this mean you have to either get better at what you do or become cheaper."
The Home Office considered evidence including the Salary Survey Publication (SSP) in Computer Weekly, the Labour Force Survey (LFS) and the e-skills (UK) quarterly bulletins.
The state of the labour market will be reviewed again in around three months' time. The shortage list may be reintroduced if there is evidence of shortages, the Home Office said.