Immigrant amnesty 'will raise £1bn'

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The Institute of Public Policy Research (IPPR), which is influential with New Labour, urged Jacqui Smith to make the radical step one of her first acts as Home Secretary.

It said that the costs of forcibly deporting those who live and work illegally in the UK would be £4.7 billion and, according to Home Office estimates, could take more than 30 years.

Doing so is "simply not desirable or feasible", the think-tank said, while regularising them could earn the Treasury £1 billion in additional taxes.

Its call comes after Commons Leader Harriet Harman and Health Secretary Alan Johnson appeared to back the idea during Labour's deputy leadership campaign.

The IPPR's head of migration and equalities, Danny Sriskandarajah, said: "Illegal immigration is a deeply difficult subject for politicians to tackle.

"But Jacqui Smith should listen to her Cabinet colleagues and back a plan for regularising the nearly half million people who live and work illegally in the UK.

"The simple truth is that we are not going to deport hundreds of thousands of people from the UK.

"Our economy would shrink and we would notice it straightaway in uncleaned offices, dirty streets and unstaffed pubs and clubs."

Immigration Minister Liam Byrne has repeatedly rejected calls for an amnesty, most recently in the Commons last Monday.