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The Bill, due to come into operation on 1 January 1972, means Commonwealth immigrants will face the same restrictions as any other person applying to live and work in Britain.
In order to be allowed to stay, they will have to produce a work permit relating to a specific job in a specific place.
They will also have to register with the police and after 12 months will have to re-apply for permission to stay.
They will only be allowed to remain in Britain after they have lived and worked here for five years.
The new law will also allow those who wish to return to their country of origin to be repatriated with travel expenses paid.
The old system of quotas will be dropped with the Department of Employment restricting numbers coming into the country by picking and choosing which applicants are to be granted work permits.
Patrial "right of abode"
Another important change is the introduction of a patrial "right of abode" which lifts all restrictions on those - mainly white - immigrants with a direct personal or ancestral connection with Britain.
Representatives of immigrants in the UK say the new bill, designed to stem racial tensions, will serve only to increase them.
"I regard this bill as basically racially discriminatory, repressive and divisive," said Vishna Sharma, Executive Secretary of the Joint Council for the Welfare of Immigrants.
"It will create divisions amongst the Commonwealth citizens already living in this country on patrial and non-patrial basis.
"It will create day-to-day bureaucracy and interference on people living in this country. "
It will create more hardship for people wanting to enter into this country."
In an interview with the BBC, Mr Maudling was asked whether the idea of "patriality" was a camouflaged colour bar.
He replied: "Certainly not. Of course they are more likely to be white because we have on the whole more whites than coloureds in this country, but there is no colour bar involved."
He said those people already accepted for residency will not be affected and made assurances that only those immigrants who wanted to return home would be repatriated and that there was no question of "forcing people to go".
Immigrants from Commonwealth countries like the West Indies and Pakistan were welcomed into Britain during the post-war labour shortage of the 1950s.
But race riots in Nottingham and London led the Conservative government under Harold Macmillan to introduce the Commonwealth Immigrants Act in 1962.
When Labour came to power in 1964 it did not repeal the act but did pass the Race Relations Act in 1965 to protect blacks and Asians from discrimination.
Public anxiety about a large influx of immigrants was further fuelled by an infamous speech made in 1968 by Conservative MP Enoch Powell who warned of "rivers of blood" if the tide of immigrants into Britain was not stemmed.
Immigration law was tightened further in 1968 (restricting the number of Kenyan Asians), 1971, 1981 and 1997 (restricting the number of Hong Kong Chinese after Hong Kong reverted to Chinese rule).
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