The bill has been slammed by lawyers and human rights campaigners, who warn it will lead to unlawful discrimination.
Immigration is a sensitive political issue in Britain given the country's struggling economy and cuts in public services.
The conservative-led government of Prime Minister David Cameron wants to reduce net migration from non-European countries from 176,000 last year to fewer than 100,000 before the next election in 2015.
Immigration Minister Mark Harper said Thursday that the new bill will stop migrants from using public services they are not entitled to and reduce the factors which encourage people to come to the U.K.
Critics argued the proposals could lead to racial discrimination and hurt immigrants in the U.K. legally.
For instance, private landlords will face fines for not carrying out the proper checks under the new legislation.
But "checking immigration status is complicated so landlords may shy away from letting to anyone who they believe not to be British," said Gavin Smart, director of policy and practice at the Chartered Institute of Housing. "Discrimination laws will not protect these people.
New measures to check the immigration status of those applying for driver's licenses will be introduced and temporary migrants, including students from abroad, will be required to contribute to the National Health Service.
The government says the latter move will cut down on "health tourism," but charity Doctors of the World said there is no credible evidence of "rampant health tourism" in the U.K.
"Migrants don't come here to see a dentist. They come to work and provide for their families, or to seek protection from persecution," the charity said.
The bill also will require banks to check the status of prospective account holders and cut the number of grounds for appealing a deportation order from 17 to four—an effort to prevent deportation sagas akin to the 12-year battle to deport radical cleric Abu Qatada to Jordan.
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