The reform of immigration policy proposed by the SNP, has been backed by Westminster’s All Party Parliamentary Group on Social Integration.
The group said a commission should be set up to examine how a devolved immigration system might work.
Immigration policy is currently controlled by Westminster.
Acknowledging that such a transfer of power would create significant challenges, the group said the current system had “led to friction” between the UK and Scottish governments.
The All Party Parliamentary Group (APPG) report agreed that the UK’s current point-based system is “generally unresponsive to demographic, economic, and cultural differences between our constituent nations and regions”.
It added: “This has led to friction between the Scottish and UK governments, as the former’s aim of increasing immigration (in order to grow its labour force) has come into conflict with the Home Office’s commitment to cut net immigration.”
The report said Scottish councils had done a “significant amount of work” to attract more immigrants but that these efforts could be “undermined by a nationally-driven reduction in the number of immigrants arriving in the UK”.
It pointed to Canada as an example of a country which had introduced a regionalised immigration system.
The Home Office has said it is not planning to introduce local immigration visa arrangements.
A UK Government spokesman said that their priority would be to build an immigration system that worked for everyone in the UK.