A European commissioner has warned the UK risks being seen as a "nasty country" after Prime Minister David Cameron outlined plans to restrict access to benefits for EU immigrants.
Mr Cameron is proposing powers to deport homeless migrants and cut rights to unemployment and housing benefits.
But Employment Commissioner Laszlo Andor urged the government not to encourage "hysteria", telling the BBC that people in the UK were not being told the "full truth" about the benefits of immigration.
In an article in the Financial Times, the prime minister said the last Labour government had made a "monumental mistake" in not restricting access to the UK labour market when Poland and nine other countries joined the EU in 2004, resulting in much larger numbers coming than expected.
He announced measures including:
- New migrants not getting out-of-work benefits for the first three months
- Payments being stopped after six months unless the claimant has a "genuine" chance of a job
- New migrants not being able to claim housing benefit immediately
- Deportation of those caught begging or sleeping rough, with no return within a year
- Quadrupling fines for employers not paying the minimum wage
Mr Cameron also questioned the principle of free movement of people across the EU, saying this right could not be "unqualified".
He suggested a future Conservative government, as part of its pledge to renegotiate EU membership, could seek more discretion over migration policy.
Working with other like-minded EU governments he said they would look at allowing member states to halt arrivals if numbers moving exceeded a certain level.
He also suggested that freedom of movement should only be fully allowed if the average income of a country's people was not too far below the EU average.
'New settlement'Transitional controls limiting Bulgarian and Romanian workers' access to the UK labour market - in place since the two countries joined the EU in 2007 - will expire at the end of the year.
There have been warnings of an "influx" of low-skilled workers and calls from across the political spectrum to review migrants' access to the health service and welfare system.
"We are changing the rules so that no-one can come to this country and expect to get out-of-work benefits immediately," Mr Cameron wrote.
He said it was time to recognise the principle of free movement, a fundamental tenet of the European Union, had "become a trigger for vast population movements".
"It is time for a new settlement which recognises that free movement is a central principle of the EU, but it cannot be a completely unqualified one," he added.
Mr Cameron said the UK would work with other EU countries to "return the concept of free movement to a more sensible basis".
However, Mr Andor described Mr Cameron's proposals as "an unfortunate over-reaction", adding that EU rules applied equally to all 28 member states and had been agreed to by the UK.
He told BBC Radio 4's Today programme that "dismantling" the rules could lead to a "slippery slope".
Mr Andor also said: "The point is that the British public has not been told all the truth."
He added that there were existing EU safeguards to prevent "benefit tourism", saying: "We would need a more accurate presentation of the reality, not under pressure, not under hysteria, as sometimes happens in the UK... I would insist on presenting the truth, not false assumptions."
Immigration from Poland and other countries had benefited the UK economy, he said, arguing that the prime minister's suggestions risked "presenting the UK as a kind of nasty country in the European Union".
The Lib Dems said the "sensible" changes would "restore confidence" in the immigration system and "ensure that the right to work does not automatically mean the right to claim".
'Too generous'"Other countries in the EU already have similar policies and are considering the case for going further," said deputy prime minister Nick Clegg. "Unfettered access to benefits across the member states does not exist."
But shadow home secretary Yvette Cooper said the prime minister was "playing catch-up" and copying a Labour idea.
"After Labour proposed this change in March, the government said it was all fine and nothing needed to change. Yet now, rather than following a coherent plan, they are flailing around."
UK leader Nigel Farage said the UK was "still being far too generous", adding: "Under his proposal, somebody can come here on 1 January from Romania and within 12 weeks be entitled to unemployment benefit."
He added the plan would do nothing to stop an unrestricted flow of a "very large number of unskilled people" coming into Britain at a time when the country was struggling with youth unemployment.
The UK has been involved in a long-running legal battle with the European Commission about EU nationals' eligibility for benefits and UKIP has said this cannot be stopped unless the UK leaves the EU.
MigrationWatch UK has said it expects 50,000 people to come from Bulgaria and Romania to the UK in each of the next five years but the Bulgarian ambassador has said he believes the figure will be much lower - predicting levels of about 8,000.
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