Birmingham employers have condemned as "ludicrous" Government plans to fine firms up to £10,000 for each illegal immigrant they employ accidentally or through negligence.
Revealing the proposals yesterday, Immigration Minister and Birmingham Hodge Hill MP Liam Byrne said the crackdown was designed to force illegal immigrants to leave the country by preventing them from working.
But Birmingham Chamber of Commerce said businesses were being punished for the Home Office's failure to control illegal immigration.
And companies voiced fears to the Government that its plans could increase race discrimination, with legitimate jobseekers missing out on posts.
Officials of businesses which deliberately employ illegal staff could go to jail and even those who recruit them accidentally, perhaps because they failed to check their paperwork, will face maximum fines of £10,000 in each case.
If approved by MPs, the fine would double from the present £5,000 per worker.
However, documents published by the Home Office revealed widespread opposition to the proposals from employers and unions.
In a consultation earlier this year, 69 per cent said new rules forcing them to check the identities of all workers would add to their costs.
In order to prevent discrimination, businesses will be told to check that everyone they employ has the right to work in the UK.
But 61 per cent said they did not believe this would be enough to prevent employers discriminating against job applicants they feared could be illegal workers.
And 30 per cent said businesses would resort to discriminating against people because of their race.
A spokesman for Birmingham Chamber of Commerce said: "It is ridiculous to expect business to police illegal working. Why not fine the immigration authorities for allowing them into the country in the first place?
"The documents people use to get work are very sophisticated and there is no way that business can take responsibility for spotting the fakes."
But ministers are determined to press ahead with the measures, in an effort to defuse concern about illegal immigration.
Mr Byrne said: "Illegal immigration is largely caused by illegal working. That's why we must shut it down.
"By closing down the possibility of illegal working, we make the UK a less attractive place for those who would seek to work here illegally, as well as those employers who wish to operate illegally."
The Home Office will launch an advertising campaign today warning businesses that the measures come into effect in February.
Ministers insisted yesterday they would press head with a planned identity card scheme for foreign nationals, which will make it easier for businesses to check an employee's legal status.
Anyone staying in Britain for more than six months will be required to have an identity card, which will contain biometric data such as fingerprints and iris prints.
Home Secretary Jacqui Smith (Redditch) said: "By stamping out illegal working we are making the UK a less attractive destination for illegal migration.
"By working together with employers and others we have developed a system that delivers the migrants the UK needs, but which also keeps out those that it does not."
Shadow Home Secretary David Davis said: "Last week the Home Office was exposed as allowing 5,000 illegal immigrants to be employed in sensitive security posts.
"Now it is proposing fining the employers of illegal immigrants up to £10,000. Does the Government have an extra £50 million in the budget to pay for its incompetence?"