Britain should refuse work permits to immigrants earning less than £25,000 a year, says a Tory commission.
Many people believe "Britain is full", says the report
The idea comes from an inquiry led by Conservative MEP Timothy Kirkhope, which says low-paid British workers are losing out from fresh immigration.
The group also wants a Cabinet minister to be specifically responsible for migration and integration policy.
The Conservatives say they will study the report while Labour says Tory policy is now an "opportunistic mess".
Former Home Office Minister Mr Kirkhope's commission says many people believe "Britain is full" and cannot cope with more immigrants.
Whether or not that view is completely fair, Britain is a densely populated country, it says.
"Our island nation is not like America in the 1880s, with new frontiers and uninhabited land to settle," it argues.
"Britain is a small island with a large population and immigration to the UK is increasing."
The report calls for an end to "unquantified" entry for low-skilled, low-paid workers.
"The business community may benefit from cheap labour, especially in the short term, but low-paid, low-skilled British workers, many of whom are
British-born from settled immigrant communities, lose out from fresh
immigration," it says.
Business could become more competitive if it cannot rely on making savings from low-pay, it suggests.
The commission cites the NHS as an example of the immigration problem.
There are 100,000 fully-trained nurses in Britain not working in nursing
because of poor pay and conditions and the chaos in the system, yet the NHS is
employing tens of thousands of foreign nurses, some of whom require expensive
medical treatment themselves, it says.
Shadow home secretary David Davis thanked the commission for its report, but stopped short of endorsing its findings.
"We will study it carefully and consider what, if any, bearing its recommendations should have on our policy formulation," he said.
Among other suggestions in the report are:
- Immigrant workers should not qualify for in-work benefits
- There should be "zero tolerance" for immigrants overstaying their permission to remain in the UK
- Those wishing to settle permanently in the UK should have to learn English.
Mr Kirkhope's commission previously came up with the idea of processing asylum claims offshore. That proposal was dropped by the Tories after being branded a "fantasy island" solution.
Immigration Minister Des Browne said: "The Tories are in turmoil, Michael Howard and David Davies are now paying the price for their own opportunism."
"Earlier this year Michael Howard admitted that 'we are a stronger and better country because of the immigrant communities that have settled here'.
"Today the Tories reveal their true colours, as their in-house Kirkhope Commission recommends an end to all legal migration."
Mr Browne said there were 600,000 job vacancies in Britain.
He asked: "If we don't have enough workers, who is going to clean our hospitals and offices, work in our restaurants and wait on our tables?"
A row has also blown up over Steve Moxon, the former civil servant who acted as "whistleblower" when immigration checks were waived in Sheffield.
In his new book, The Great Immigration Scandal, Mr Moxon says the word "Paki" is not necessarily derogatory.
He also says an "explosion" in immigrant numbers could bring "an escalation to near civil war".
Mr Browne said Mr Davis was "unfit" to be home secretary as he was only now trying to distance himself from Mr Moxon after saying he would attend to the book's launch.
But a Tory spokesman said Mr Davis had never endorsed the book, which Tory headquarters had only just seen.
Mr Davis some time ago said he would attend the launch and speak about Mr Moxon's whistle blowing but he has now pulled out.