Switzerland's right-wing People's Party (SVP) decided on Saturday to launch a referendum on ending the Swiss-EU agreement on free movement of people, in order to curb immigration.

The initiative comes after the Swiss parliament opted for a moderate immigration law instead of caps and quotas, to the disappointment of the SVP, Switzerland's strongest party.

"We can only slow down and direct the uncontrolled migration flow if we tighten the reins and take our own decisions about who can work and live in Switzerland and who has to leave," SVP parliamentarian Marco Chiesa said at a party meeting in Lausen near Basel.

It may take years until voters cast their ballots on the referendum launched by the SVP, along with the Campaign for an Independent and Neutral Switzerland (AUNS), a conservative lobby group.

The initiators first need 100,000 signatures from supporters. Then the government can wait up to two years before scheduling the vote.

However, even the preparations and public debate can create political momentum, AUNS executive director Werner Gartenmann said.

Ahead of previous referenda, "it was not uncommon that already the collecting of the signatures put a certain pressure on the government," he told dpa.

In an SVP-backed referendum in 2014, a narrow majority of voters demanded tough immigration restrictions, but parliament eventually adopted a more moderate policy so as not to violate the Swiss-EU free movement pact.

One in four people in Switzerland have foreign passports - one of Europe's highest shares. More than 80 per cent of foreigners are Europeans.