A furious row has broken out at the heart of the coalition Government over the right of European Union nationals to work in the UK, with Deputy Prime Minister Nick Clegg branding proposals floated in a leaked Home Office document "illegal and undeliverable".
Reports over the weekend suggested that Home Secretary Theresa May wants to introduce a cap on EU migration, possibly at 75,000 a year, with professionals and high-skilled migrants from wealthy countries such as Germany, Austria or the Netherlands allowed in only if they had a job offer and lower-skilled workers permitted to settle only if they were employed in posts where there was an identified shortage.
Mrs May said that r eform of the right to free movement should form part of any negotiations on new arrangements for the UK's membership of the European Union.
And she revealed that she has already been discussing the issue "for some time" with counterparts in other EU states who are also concerned about issues such as "benefit tourism" and movements of workers between countries with wide disparities in incomes.
The Home Office paper is understood to have been drawn up as part of the Government's "balance of competences" review of how EU rules impact on the UK. Liberal Democrat sources said that the publication of a "balanced" cross-governmental assessment of the freedom of movement issue had been delayed by resistance from the Home Office, only for a "very selective, one-eyed version" of the argument to find its way into the Sunday Times.
Mr Clegg made clear he had no doubt that Mrs May's department was to blame for the leak, telling a Wesminster press conference: "My advice to the Home Office is to spend less time leaking policies that are illegal and undeliverable and spend more time delivering on the policies we have agreed as a coalition - notably the reinstatement of exit checks.
"I remain very frustrated that the Home Office has still not delivered something which I personally insisted should be in the Coalition Agreement, which is a reinstatement of the checks which allow us to know not only who's coming into this country but who's leaving as well."
Speaking to BBC Radio 4's Today programme, Mrs May declined to comment on the leaked report.
But she said: " This is something I've been talking about with my opposite numbers - interior ministers in other countries within the European Union - for some time now.
"There is a growing concern not just here in the UK, but elsewhere too, about the abuse of free movement, about the way in which people can move freely across Europe, sometimes for access to benefits."
The UK is already tightening up rules on migrants' access to benefits, as Romanian and Bulgarian nationals gain new rights to live and work in Britain from next month.
But Mrs May made clear that she and Prime Minister David Cameron want further reforms to control the access of nationals of any future EU entrants.
"What the Prime Minister has said and what I have said is that in looking at reform of the EU we need to look at this whole question of the arrangements for new countries that come in - the so-called accession countries," she said.
"At the moment, you can restrict free movement rights for seven years. What both the PM and I have said is we need to look at this and think about whether that should be longer, whether it should be more flexible, whether we should look at restricting free movement rights until a country's national income, GDP, is at a certain level, so we are not looking at the great disparities we sometimes see across the EU.
" What I'm saying is that as we look ahead to the whole issue of reform of the European Union, I think we do need to look at this question of free movement.
"This isn't something that is just being raised in the UK. There are a number of countries who are concerned at various levels about this issue of free movement, particularly obviously about abuse of free movement.
"The whole issue of free movement has changed over the years. At the original start of the EU, it was about free movement of workers. It's now been expanded by treaties and by the courts in terms of their interpretation of it.
"So I think it is right that we look at the question of abuse and we look at the accession of new countries and say what makes sense for member countries within the EU in terms of the future and in terms of what this free movement right is."
Mr Clegg said the leaked proposals to "pull up the drawbridge" on migration from other EU states would be a "disaster" for British business
"If we pulled up the drawbridge now and said to German lawyers or Finnish engineers or Dutch accountants that they can't come to work here, it would be a disaster for our economy," he said.
"We are an open economy. The City of London would grind to a halt overnight. It would be very, very bad for British business and for the health of the British economy.
"It would be very unwelcome to the two million or so Brits who live and work abroad, who I don't think would thank the Conservative Party for entering a tit-for-tat race to the bottom where everybody in the EU starts pulling up the drawbridge."
The goal of reintroducing exit checks to provide a reliable record of who has departed via Britain's ports and airports was included in the 2010 coalition agreement with Conservatives at Mr Clegg's insistence.
But the Deputy Prime Minister revealed in July this year that he was frustrated by the Home Office's failure to put the plan into action, and said he had asked Lib Dem minister David Laws to work "day in, day out" to chase its progress.
Today, he said: "I remain very frustrated that the Home Office has still not delivered something which I personally insisted should be in the Coalition Agreement, which is a reinstatement of the checks which allow us to know not only who's coming into this country but who's leaving as well."
Mr Clegg said he was hoping Mrs May would be able to announce progress "in the coming period", adding: "I think she and her team are now properly committed to getting something done. I wish we had started earlier on some of that work, but better late than never."
Lib Dem sources said they now expect an announcement on the checks in the first few months of 2014.