Italy and France have jointly expressed support for EU "asylum centres" to be set up in countries where many migrants begin their journeys to Europe.
Italian Prime Minister Giuseppe Conte and French President Emmanuel Macron met in Paris after a days-long row over the fate of the rescue ship Aquarius.
Italy had refused to accept the vessel, carrying more than 600 African migrants, diverting it to Spain.
Mr Conte and Mr Macron have now agreed the current system must be reformed.
Mr Macron proposed building migration centres in countries of departure, including Libya, from which many people attempt a dangerous sea crossing to Europe - an idea he has raised in the past.
He said many of those attempting the journey had "no possibility of obtaining asylum in Europe", but die in the attempt - or spend months living in poor conditions only to be sent home.
Processing asylum claims in applicants' home countries could avoid those problems, he said.
Mr Conte, the head of Italy's new populist coalition government, agreed with the plan, calling for widespread reform of the current system.
Doubt over Dublin agreement
Currently, the EU migration system says that asylum seekers must apply for protection in the country they first arrive in within the EU, with few exceptions - under a law known as the Dublin regulation.
That has placed a significant burden in recent years on frontline countries - notably Italy and Greece, where most undocumented migrants arrive, after risking their lives on overcrowded boats.
Mr Conte said Italy was "very much opposed" to current plans for reforming the Dublin regulation, and said Italy would propose its own "radical paradigm shift".
He said that the "concept of country of first arrival needs to be reconsidered".
"When someone sets foot in Italy, they set foot in Europe", he said.
Migration reform is likely to be a key topic at the meeting of EU leaders later this month, as many countries continue to grapple with the political fallout caused by an influx of migrants in recent years.
Italy's populist coalition - and in particular its interior minister, the right-wing League party leader Matteo Salvini - has promised to take a tough stance on immigration, resulting in the diplomatic row over the fate of the rescue ship Aquarius in recent days.
In Germany, meanwhile, a major rift over the treatment of migrants at the border has threatened Chancellor Angela Merkel's own coalition government.
And on Thursday, Oxfam issued a report accusing French border guards of physically abusing children attempting to cross the French-Italian border.
The meeting between Mr Macron and Mr Conte was almost cancelled over the Aquarius row.
The two governments traded angry words after Italy refused to accept the ship and its 629 mainly African migrants.
Mr Macron had accused Italy of "cynicism" and "irresponsibility" for failing to take in the group.
Italy responded by accusing France of "hypocrisy", arguing that Italy's resources were severely stretched and that its EU partners must do more to help it cope with the arrivals.
The acrimony was so bad that Italy summoned the French ambassador and cancelled a meeting between the two countries' economy ministers.
Relations were patched up on Wednesday evening, when Mr Macron phoned Mr Conte to tell him he had not meant to offend Italians.
The ship is now sailing to Valencia in Spain. It is expected there on Sunday. Italy on Wednesday allowed a ship carrying more than 900 migrants to dock in Sicily.